What is Auto Enrollment?

The law on workplace pensions has changed. Under the Pensions Act 2008, every employer in the UK must put certain staff into a pension scheme and contribute towards it. This is called ‘automatic enrolment’.

This legislation will have a significant impact on your business and you need to be aware of the costs to your business and what your responsibilities are as an employer.

Every company in the UK will be affected by this legislation and has been allocated a date by which the pension scheme must be in place, this is known as the “staging date”.

Whether your employees work full-time or part-time, you’ll have to enrol your staff in a workplace pension scheme if they:

  • Are not already in a suitable workplace pension scheme
  • Are at least 22 years old, but under State pension age
  • Earn more than £10,000 a year (tax year 2015-16)
  • Work in the UK

Then every three years, you must automatically enrol eligible employees who have formerly opted out.

Automatic enrolment duties do not apply when a company or individual are not considered an employer.

You may be exempt – Learn more on the Exemption tab above.

How does this affect you?

You should have been sent a letter informing you of the staging date for your company from The Pensions Regulator. Once you know your staging date you need to begin preparations at least six months in advance.

As an employer you are responsible for selecting a suitable pension scheme for your employees.

In order to comply with your legal obligations you must choose a scheme that meets the qualifying rules and, is prepared to accept your workforce. Not all qualifying pensions are the same and some may contain restrictions or lack suitable options.

Costs

The first step is to work out how much you’ll be paying into your scheme. We recommend you do this approximately nine months before your staging date to fully prepare yourself.

One of your automatic enrolment duties will be to pay a regular contribution into your staff pension scheme. Employees must contribute a minimum total amount that has to be contributed by you.

The minimum contributions that you must pay into your staff’s pension scheme are shown in the table below – they’re currently a total contribution of 2% with at least 1% employer contribution.


Date: Before 05/04/18

Employer minimum contribution Total minimum contribution
1% 2% (including 1% staff contribution)

Date: 06/04/18 – 05/04/19

Employer minimum contribution Total minimum contribution
2% 5% (including 3% staff contribution)

Date: 06/04/19 onwards

Employer minimum contribution Total minimum contribution
3% 8% (including 5% staff contribution)

Stay compliant

You must keep information and records about what contributions you pay to your pension scheme for six years (in most cases).

Request our free guide on staying compliant below:




 

Checks

Now that you have an idea of the costs, you need to check that your staff records are up-to-date (such as dates of birth, salaries, National Insurance numbers and contact details) and that your payroll records and/or software can provide the right information for automatic enrolment.

As well as keeping track of your staff details, you should also check the amount they are paying into the scheme each pay period, once you’ve automatically enrolled them.

How can Ascendis help?

We are here to help. We can ensure that you have a qualifying scheme in place, whether that be a new scheme or making sure your current scheme complies. There are key decisions to be made when building the pension scheme and we can advise on these to ensure additional workload is kept to a minimum and costs are kept under control.

If you would like to discuss this important development in workplace pensions in more detail please let me know. I can arrange a meeting with you at your premises and at a time convenient to you to discuss the impact on your business.


To arrange a free no obligation meeting enter your details in the contact box.

Alternatively contact us 07528 821658 or email john.winstanley@ascendis.co.uk.

Are you exempt from
Auto Enrolment?

Automatic enrolment duties do not apply when a company or individual are not considered an employer. You won’t have any duties if you meet one of the following criteria:

  • You’re a sole director company, with no other staff
  • Your company has a number of directors, none of whom has an employment contract
  • Your company has a number of directors, only one of whom has an employment contract
  • Your company has ceased trading
  • Your company has gone into liquidation
  • Your company has been dissolved
  • You no longer employ people in your home (cleaners, nannies, personal care assistants, etc.)

 

Let us help!

If you fit the above criteria, talk to the team here at Ascendis, we can ensure that you and your business comply with legislation, we are able to undertake your obligations with the Pensions Regulator on your behalf.

The Pension Regulator will not know you are exempt – so they need to be told!

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