‘Auto-Enrolment’ is a government initiative which commenced in 2012 and will eventually require all employers to enrol their employees into a workplace pension; This will require employers to contribute a minimum level of pension contributions with employees having the option also to make contributions on which they will obtain tax relief.
It should be noted that all employers will have a legal duty to enrol staff into a workplace pension automatically and that failure to comply will lead to automatic penalties.
The dates by which an employer must start to offer a workplace pension (or staging date as it is officially termed) depends on the number of employees that are within their PAYE scheme.
October 2018 saw all employers, however small needing to be enrolled and providing a workplace pension to its employees. Enrolment can be into a pre-existing or newly set-up scheme, ensuring it offers all the features of a ‘qualifying pension scheme’.
At least six months before their ‘staging date’ an employer will need to identify which employees will need to be automatically enrolled, make their employees aware of the scheme and ensure that their payroll system supports auto-enrolment.
Once an employer’s staging date arrives, they must:
- Enrol eligible employees into the chosen pension scheme
- Start making contributions into that scheme
- Maintain proper records
- Complete a ‘declaration of compliance’ with the Pension Regulator
Employees who meet the following criteria will be automatically enrolled into a pension scheme:
- Be 22 years old or over but under state pension age
- Not already enrolled in a qualifying pension scheme
- Earn more than £10,000 per annum
- Ordinarily, work in the UK
Eligible employees who do not wish to participate in the workplace pension scheme will have the opportunity to ‘opt-out’ once they have been enrolled.
Types of Pension Schemes
Where an employer does not already have a pension scheme in place, various options exist including – defined contributions schemes, defined benefit schemes and stakeholder pensions.
TThe Pensions Regulator has published ‘The Essential Guide to Automatic Enrolment’ which will help you to understand your employer responsibilities further and can be accessed at the following link:
The staging date of an individual employer can be found by entering your PAYE Reference at the following link:
Guidance and ongoing support from Marsh Vision
If you require guidance and support in establishing pension auto-enrolment and advice on how this needs to integrate with your payroll system, then please arrange a consultation by calling us on 01633 215544 or via email at: email@example.com