Auto Enrolment
What is it?
Auto enrolment is a government initiative and requires all employers of staff working in the UK to enrol their *qualifying staff into a workplace pension scheme and make contributions towards it.
*qualifying staff = an employee who ordinarily works in the UK, is 22 and over but under the state pension age, earns more than £10,000 a year
Why was it introduced?
The UK government found that too few workers were paying into a pension resulting in them not having enough to live on during their retirement and introduced new laws.
When was it introduced?
Auto enrolment was introduced under the Pensions Act 2008 and *larger companies were the first to auto-enrol in 2012.
*larger companies = 250+ employees
What does this mean for employers in 2018?
You could face penalties and enforcement action from the Pensions Regulator if you fail to fulfil your duties under the Pensions Acts 2004 and 2008 and regulations. To ensure compliance, employers must:
Provide your employees with information about your auto enrolment duties.
Automatically enrol all your qualifying staff into a pension scheme.
Put all your non-qualifying workers who decide to opt in, into the pension scheme.
Provide written confirmation to your qualifying workers that they have been enrolled.
Make sure any qualifying worker who wishes to opt out from the scheme is removed, and their contributions refunded.
Submit a *Declaration of Compliance to the Pensions Regulator within five months of their **staging date.
Automatically re-enrol eligible workers every three years if they have not joined another pension scheme in the meantime and renew their registration.
Keep records of the enrolment process (such as letters or communications you provide to employees).
*declaration of compliance = used to inform the Pensions Regulator of what has been done to comply with an employer’s automatic enrolment duties
**staging date = this is the date an employer is legally obliged to auto-enrol employees and is dependent on certain factors e.g. number of employees, date company was set up – you can find out your staging dates by quoting your PAYE Reference to the Pensions Regulator
Did you know?
When a company becomes a new employer for the first time, from 1st October 2017, it has auto enrolment duties from the day the first member of staff starts working for them.
Also minimum contributions are increasing in two phases. The first increase must be in place from 6 April 2018 and the second from 6 April 2019
Employer minimum contribution:
Until 5 April 2018 = 1%
6 April 2018 to 5 April 2019 = 2%
6 April 2019 onwards = 3%
The staff contribution rate may vary depending on the type of tax relief applied by your scheme.
We appreciate this is a lot of information to keep on top of as well running your business. With penalties and fines enforced for non-compliance you cannot afford to ignore your duties. WePayroll provide a fully managed auto enrolment solution and can help with setting up a company pension scheme and keeping you compliant. Contact us today to find out more.
