Auto-enrolment – a basic guide
Due to changes in the law on workplace pensions, every employer with at least one member of staff now has a duty to enrol their employees into a workplace pension scheme and contribute towards it.
It is called ‘automatic enrolment’ because it is automatic for staff. They do not need to do anything to enrol and must actively opt out of the scheme if they do not wish to contribute.
Each employer is expected to implement a scheme at a specific staging date which is determined by the number of staff they have. The Pension Regulator (TPR) will write to all employers notifying them of this date. Alternatively, the date can be found on the TPR website: www.tpr.gov.uk/staging-date
A consensus opinion seems to be that you need to start preparing for the new system at least 12 months in advance. Ellis Lloyd Jones can help clients through this planning process.
You will need to pay a regular contribution into the pension of your eligible staff. The table below gives an indication of the amounts that will need to be contributed:
You will need to assess all of your staff to determine who is eligible but you may not be required to register all of them.
You have an ongoing duty under auto enrolment and will need to check every payday each of your staff’s eligibility under the scheme.
It is against the law to induce or encourage your staff to opt out.
You will need to ensure you have appropriate payroll software and that you hold all the relevant information for your staff necessary to operate the scheme.
You will need to have a pension scheme in place. If you have an existing stakeholder scheme in place then you may be able to use this for automatic enrolment, although, in most cases, a new scheme will be required. Alternatively, you will need to setup a new scheme. You will need to approach a pension provider in good time to setup a scheme, as most providers are experiencing high demand due to the number of employers setting up such schemes.
It is important that the scheme you choose is well run and offers good value for money for you and your staff.
Some staff, although not meeting the automatic enrolment criteria, will still have the right to join your pension scheme on request.
You will need to contact your staff to tell them how automatic enrolment affects them.
You must provide The Pension Regulator with a declaration of compliance once you have automatically enrolled your staff.
You must meet the ongoing record keeping requirements for the scheme. Filings will need to be submitted to your pension provider with each payroll run.
Ellis Lloyd Jones offer a comprehensive auto-enrolment service. Check out what we offer here: