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Automatic enrolment help sheet

All UK employers (regardless of size) must have a workplace pension scheme.  You will need to start preparing 12 to 18 months prior to your staging date.  The staging date for most small employers (less than 30 employees) will be between October 2016 and April 2017, and so you need to start thinking about how auto enrolment will affect you as an employer now.  All employers will have to comply with the regulations by April 2018.

There are 7 steps to auto enrolment

  1. Find out your staging date
  2. Assess your workforce
  3. Review your pension arrangements
  4. Advise your staff of the changes
  5. Automatically enrol your “eligible jobholders”
  6. Register with the pensions regulator and keep records
  7. Contribute to your workers’ pensions

Looking more closely at the 7 stages:-

  1. Find out your staging date

This is the date that the new law will apply to you.  The pensions regulator will write to you 18, 12 and 3 months prior to your staging date, but you can find out your staging date from the pensions regulator website http://www.thepensionsregulator.gov.uk/employers/tools/staging-date

You will need your PAYE reference

  1. Assess your workforce

You will need to assess your workforce, and there are three categories:-

  • Eligible jobholders – automatic enrolment – worker and employer contributions
  • Non-eligible jobholders – may opt in to a qualifying pension – worker and employer contributions
  • Entitled workers – may join any pension – worker contributions

The next criterion for assessment is based on the worker’s age and their earnings

Qualifying earnings pa 16 to 21 years 22 years to state pension age State pension age to 74 years (inclusive)
Over £10,000 Non-eligible jobholder Eligible jobholder Non-eligible jobholder
Between £5,876 – £10,000 Non-eligible jobholder Non-eligible jobholder Non-eligible jobholder
Below £5,876 Entitled worker Entitled worker Entitled worker

Qualifying earnings include:

  • Salary/wages/overtime
  • Commission/bonuses
  • Statutory payments

Earnings thresholds

2014/2015 Annual Week Month
Lower level of qualifying earnings £5,876 £113 £490
Earnings trigger for automatic enrolment £10,000 £192 £833
Upper level of qualifying earnings £45,000 £866 £3,750
  1. Review your pension arrangements

The pension schemes to be used for automatic enrolment must satisfy the following three tiers:

Automatic enrolment criteria

Must not enforce barriers

Must not require workers to consent

Must not force a worker to make choice

 

Qualifying scheme criteria

Be an occupational or personal pension scheme

Be tax registered

Satisfy minimum requirements according to type of scheme

Minimum requirements

Defined contribution schemes (dc) occupational or personal

Defined benefit scheme (db)

Hybrid scheme

If you do not already have a pension scheme in place, then you will need to choose a scheme provider, for example nest pensions or another provider, please see www.abi.org.uk/pensionproviders or seek advice from your ifa

  1. Communicate the changes to your staff

You will need to write to all your staff providing them with specific and individual information and what auto enrolment will mean to them

Contributions information – how much it will cost them and how much you will contribute

Explain the benefits

Explain the tax relief

Provide right to opt in and out information and explain postponement and deferral dates

  1. Automatically enrol your eligible jobholders

This means that you will have your pension scheme in place and you must automatically enrol all of your eligible jobholders into your pension scheme from the staging date.

You will need to provide your pension scheme with your workers’ personal details

You will need to provide your eligible job holders with the enrolment information so that they can decide whether to opt out before the end of the opt out window

  1. Register with the pensions regulator and keep records

This needs to be done within 5 months of your staging date and is an on-line process through the government gateway

You will need to keep records for up to 6 years for each employee to include contributions made by employee and employer, opt-in and opt-out notices, employees who have been postponed and information on your pension scheme.

Contribute to your workers’ pensions, based on qualifying earnings

Dates Worker contribution Minimum employer contribution Minimum total contribution
From staging date to 05.04.2018 1% 1% 2%
From 06.04.2018 3% 2% 5%
From 06.04.2019 5% 3% 8%

Employers should pay the contributions to the pension scheme by 19th/22nd of the following month.

More detailed information can be found at the pensions regulator website: www.thepensionsregulator.gov.uk

 

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