Gearing up for auto enrolment: Key Steps
Are you in?
Pension auto-enrolment, which requires employers to automatically enrol eligible workers into a qualifying pension scheme, has been described as the biggest shake-up of workplace entitlements for decades.
Know your staging date and develop a plan
Your ‘staging date’ is the date from which your auto-enrolment duties first apply. It is determined by the total number of people in your largest PAYE scheme, based on HMRC’s records as at 1 April 2012. You can find out your staging date by visiting http://www.thepensionsregulator.gov.uk/staging.
Assess your workforce
You will need to identify any eligible jobholders working for you. Automatic enrolment is required for those who:
are aged between 22 years and the state pension age
have qualifying earnings above the earnings trigger for automatic enrolment (£9,440 in 2013/14)
are working or ordinarily working in the UK
are not already a member of a qualifying pension scheme.
You will also need to consider whether you have an employer duty in relation to other types of workers including non-eligible jobholders and entitled workers.
Review your pension arrangements
Decide on the type of pension scheme you will offer. Do you have an existing scheme that meets (or can be changed to meet) the Government’s requirements, or will you need to set up a new one? You may also want to consider the new National Employment Savings Trust (NEST).
Communicate the changes
Employers are required by law to write to most workers explaining what automatic enrolment into a workplace pension means for them. There are different information requirements for each category of worker.
Make sure you have a strategy in place for briefing employees and plan how you will manage any queries that arise.
A range of letter templates are available on the Pensions Regulator website to help employers fulfil their legal obligations.
Automatically enrol eligible jobholders
Under the new regulations, employers are required to: provide information to the pension scheme about the eligible jobholder; give enrolment information to the eligible jobholder; and make arrangements to achieve active membership for the eligible jobholder. This should be carried out within the ‘joining window’ (the one-month period from the eligible jobholder’s automatic enrolment date).
Register with the Pensions Regulator and keep records
All employers will need to register online with the Pensions Regulator within four months of their staging date.
Employers must also keep specific records about their workers and their pension scheme(s).
Contribute to workers’ pensions
From October 2018 all businesses will need to contribute at least 3% on the qualifying pensionable earnings for eligible jobholders. Compulsory contributions will be phased in over a number of years.
Employers are also required to make contributions for non-eligible jobholders who choose to opt in to the pension scheme.
Whatever your staging date, it is important to prepare for auto-enrolment in good time. Further information for employers is available at http://www.thepensionsregulator.gov.uk.