Automatic Pension Enrolment

Is your business ready for the challenge?

The Government estimates that millions of people in the UK are currently not saving enough for their retirement. To help solve this problem, the Government has introduced legislation that means every employer will have a duty to put a pension scheme in place. You’ll also have to automatically enrol certain workers into the scheme and make contributions on their behalf.

This presents a huge challenge for your business. You’ll need to understand your automatic enrolment duties, the impact on your business and the changes you’ll have to make. We can help you with this challenge. We offer a range of services which will help you to understand and prepare for automatic enrolment. By starting to plan now, we can help you to mitigate the costs and minimise the disruption to your business.

The sooner you act the more time you’ll have to consider what options will suit your business.

Please read carefully the information below then call us on 01706 830678 or email using our contact page.

Workplace Pension Legislation

There was a change to the law on workplace pensions, you are required to automatically enrol certain workers into a pension scheme and contributing a specific level. This legislation was introduced in 2012 in stages, the date your employer duties first apply is known as your staging date.

Your duties will involve you automatically enrolling some workers into a pension scheme and arrange membership for others. You will be responsible for the ongoing maintenance of the scheme and have an obligation to keep certain records. You must assess your workforce to determine whether they’re classified as a ‘worker’ and there are three different categories of worker as follows:

Eligible Jobholders

Earnings above £10,000 (2013/14), aged between 22 and State Pension Age

These employees must be automatically enrolled into an automatic enrolment scheme.

Non-Eligible Jobholders

Earnings over £5,824 up to £10,000 (2013/14), aged between 16 and 75 or earn above £10,000 and are under 22 or over State Pension Age

These employees have the right to opt into an automatic enrolment scheme, should they choose to opt in then the employer must also contribute to the pension scheme for this category of worker.

Minimum Requirement

The minimum contribution level required for an automatic enrolment scheme is based on qualifying earnings, Qualifying earnings (including salary, wages, overtime, bonuses, statutory sick pay and statutory maternity pay) are a band of earnings of more than £5,668 and £41,450 or less, These figures are for the year 2013/14 tax year and are expected to increase each year. You are able to minimise the cost of scheme by phasing the contributions over the next five years as shown in the table below:

DateTotal must beEmployer must contribute
October 2012-September 20172%1%
October 2017-September 20185%2%
October 2018 onwards8%3%

An agreement must be in place for the jobholder to make up at least and difference between the total and the employer amount.

Employer Duties

To summarise your employer duties for each type of worker:

Category of WorkerEmployer Duties
Eligible Jobholder
  • Automatically enrol them into an automatic enrolment scheme
  • Make contributions on their behalf
  • Process any opt-out notices and refund contributions paid
  • Every three years re-enrol those who have previously opted out
  • Keep records of the automatic enrolment and opting out processes and
    provide to The Pensions Regulator if requested
Non-Eligible Jobholder
  • Provide information about their right to opt in to an automatic enrolment scheme
  • Arrange pension scheme membership and make contributions on their behalf
  • Continually assess their age and earnings
  • Keep records of the enrolment, opting in and out processes and provide to The Pensions Regulator if requested
Entitled Worker
  • Provide information about their right to join a pension scheme
  • Arrange pension scheme membership
  • Deduct contributions from their salary and pay these into the scheme
  • Continually assess their age and earnings
  • Keep records of the joining process and provide to The Pensions Regulator if requested

If you do not comply with the above duties The Pensions Regulator will issue a notice detailing any breaches which must be implemented and corrected within a specific timescale. Failure to do so will result in the fixed penalty fine of £400.

How we can help

We will provide you with practical help and advice every step of the way through automatic enrolment:

  • We can work out your staging date. This is the date your employer duties will start
  • We can review the pension schemes you have in place to find out what you have to do to make it suitable for automatic enrolment.
  • We can review your workforce to help you understand what your new duties will be.
  • We will engage with your workforce and explain ‘what a workplace pension’ is.
  • We can design the right pension scheme for your business and your workers.
  • Start taking Action 12 months before your Staging date
  • Make sure your Employee data is up to date
  • Assess the likely costs of setting up and running the scheme
  • Find the right payroll system
  • Test your payroll processes before going live
  • Give yourself more time than you think you might need

The next step

The sooner you act the more time you’ll have to consider what options will suit your business.

Find out how we can help you ensure that your business is ready for automatic enrolment.

Call us now to discuss your options on 01706 830678 or email using our contact page