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TEAMHR Employment Law News Update March 2009

Mandatory Employer's Pension Contributions.. 21 months and counting

As the Bank of England interest rate falls to 0.5% and the real prospect of deflation, it seems timely to remind employers, particularly SME's, of the likely changes to pension arrangements from 2012 because of the implications for employment costs against a back drop of likely wages and salaries stagnation, or even wages and salaries reduction. So just before employers budget on wages and salaries not on.

At the moment, employers are obliged to provide access to a Stakeholder Pension Scheme for their employees if they employ 5 or more people. That is the extent of the obligation, there is no requirement for employers to contribute to the scheme. The only exceptions to this are (1) where the contract of employment provides for an employer's contribution either to a Stakeholder Pension or other Occupational Scheme OR (2) where an obligation on the employer to make an employer's contribution arises from a TUPE transfer because of the nature of pension arrangements prior to the date of the transfer.

Subject to legislation employers are reminded that from 2012, just 21 months from now, the following changes are planned:

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