What is Auto Enrolment

WHAT IS AUTOMATIC ENROLMENT

Every employer with at least one member of staff now has new duties, including enrolling those who are eligible into a workplace pension scheme and contributing towards it. This is called automatic enrolment.

Ideally, you should allow up to 12 months to prepare because automatic enrolment is your legal duty and if you don’t act you could be fined.

If you have at least one member of staff whom you pay via a PAYE scheme, automatic enrolment duties apply. The date your automatic enrolment duties start is called staging date and is when the law comes into effect for you.

Your staff are people you pay via a payroll. You must assess them for automatic enrollment based on their ages and how much they earn, regardless of how many hours they work for you.


You need to set up a pension scheme to enrol your staff into. There are different types of pension schemes available and different types of providers offering these schemes. National Employment Savings Trust (NEST) is a pension scheme provider that has been established by the government and is obliged to accept all employers that apply to join it.

One of your automatic enrolment duties will be to pay a regular contribution into your staff pension scheme. The table below shows the minimum amounts you’ll need to contribute.

Date

Employer minimum contribution Total minimum contribution
Before 30/09/17

1%

2% (including 1% staff contribution)

01/10/17 — 30/09/18

2%

5% (including 3% staff contribution)

01/10/18 onwards 3%

8% (including 5% staff contribution)

 

When you start paying these contributions after your staging date, they’ll need to be calculated and deducted via your payroll process.

It is essential that you ensure your staff records – including their dates of birth, salaries, National Insurance numbers and contact details – are correct and up to date. You’ll need to keep track of your staff details, as well as the amounts paid into the scheme each pay period, once you’ve automatically enrolled them.

Payroll software can simplify the process of assessing your staff and providing information about them to your pension provider. It will help you be ready to pay contributions and send data to your pension provider on a regular basis. It will also help you to automatically enrol staff as they become eligible.

By your staging date you should have everything in place and be ready to enroll your staff into your automatic enrolment pension scheme.

You can choose to postpone automatic enrolment for up to three months for some or all of your staff. You must write to your staff to tell them you’re postponing automatic enrolment for them. One of the times you can postpone is from your staging date.

After your staging date, you must write to your staff to tell them about your pension scheme and how automatic enrolment applies to them.

Once you’ve enrolled your staff, you must complete your declaration of compliance. Your declaration confirms to The Pension Regulator that you’ve complied with your duties. Completing your declaration is a legal duty and, if you fail to complete yours within five months, you could be fined.



Comments are closed.

Tax Concept