Automatic Enrolment Helpsheet
There are seven steps to auto enrolment
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
- Find out your staging date
- Assess your workforce
- Review your pension arrangements
- Advise your staff of the changes
- Automatically enrol your “eligible jobholders”
- Register with the pensions regulator and keep records
- 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
2. 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 |
3. 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 ABI or seek advice from your IFA.
4. 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
5. 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
6. 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.
7. 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: https://www.thepensionsregulator.gov.uk/
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