Auto-enrolment is the biggest change to workplace pensions for generations. The crux is about making sure employees are saving for retirement and that they have a pension. As a result of the changes to workplace pension legislation, all employers will be required to ensure more of their employees have a pension in place.
Auto-enrolment means that as an employer, you will be required to automatically enrol your employees in a pension scheme.
Who does it affect?
Auto-enrolment applies to all organisations, regardless of size or number of employees.
More specifically, Auto-enrolment relates to all employees aged between 22 and the state pension age, who currently earn more than £10,000 per year and who are not already in a qualifying workplace pension scheme.
For employees aged under 22 or over state pension age (SPA), should they wish or request to be part of enrolment, then an employer must allow them to do so. There is no requirement for the employer to pay minimum contributions if such employees earn less than £5,772.
When does it come into effect?
To help manage the introduction of auto-enrolment and allow time for organisations to put plans in place, the government/pensions regulator has devised a timetable for take-up or staging dates. An employer’s staging date is determined by the number of employees forming their PAYE scheme as at April 01 2012.
Whilst many of the larger employers have already been required to implement auto-enrolment, many smaller employers are still to do so. There is a significant number of employers due to
Auto-enrolment staging dates
Employers with 50 to 249 people in their largest PAYE Scheme will be staged between April 01 2014 and April 01 2015.
Employers with fewer than 50 people in their largest PAYE Scheme will be staged between June 01 2015 and April 01 2017.
Some employers with fewer than 50 employees may have staging dates earlier than this – this may be because their PAYE includes non-workers who are in receipt of pension benefits. Under such
New employers setting up a new business from April 01 2012 up to and including September
How much are the contributions?
There is no minimum employee contribution. There is a minimum total of 2% of qualifying earnings of which the employer must pay 1%. If the employer chooses to pay the full 2%, say through salary exchange, then there is no minimum due from the employee. If the employer limits its contribution to its legal minimum then the employee will pay the balance.
The contributions payable relate to earnings bands ranging from, at present, £5,772 up to a maximum of £41,865. Therefore there is a ceiling for total payments under auto–enrolment.
When do you need to take action?
Experience shows that
Certainly, the time and work required to establish the process invariably takes longer and is much more involved than most first think, not least for the smaller organisations with greater demands on resources.
What if you already have a pension scheme?
You may already have an existing pension scheme in place,
If you have an existing defined contribution scheme then you can assess whether such a scheme meets the minimum criteria for an automatic enrolment scheme by using the Qualifying Scheme Tool.
What if you don't have a pension scheme in place?
Details of other providers can be obtained by contacting Streets Financial Consulting plc* - please email email@example.com or call 01522 536108.
How do you go about implementing auto-enrolment in your organisation?
The work involved in setting up an approved auto-enrolment scheme should not be underestimated. For those employing a large workforce with dedicated staff and resources to deal with
For more information about the process an employer needs to follow in order to be compliant in meeting their Auto-enrolment duties, please visit The Pensions Regulator.
What else does auto-enrolment impact on in terms of your organisation or business?
Your payroll department should also be made aware.
Other than introducing the scheme itself the biggest impact on the organisation will be that on its payroll procedures, processes and record keeping.
As part of planning for
In considering the implementation of auto-enrolment in your organisation, you may want to consider how you manage your payroll. If you currently manage it in-house, it may, given the increased compliance and burden of Real Time Information (RTI) and auto-enrolment, be appropriate to look at outsourcing payroll. Use of a payroll bureau can offer the benefits of being more cost effective and give you peace of mind that you are compliant with the new regulations.
If you use an in-house payroll system such as Sage Payroll, then one of our Sage specialists can provide advice and support as required.
If you wish to consider outsourcing your payroll, Streets offer a comprehensive payroll service that is fully RTI and Auto-enrolment compliant. For a free quotation please contact your regular Streets contact or email firstname.lastname@example.org
Employee status and contracts of employment
As part of the process of adopting
It will not only be the obvious sections that need amending but policies such as those relating to Data Protection may also need addressing.
What if employees do not wish to take part?
Employees that do not wish to enrol on or participate in a scheme can choose to opt out.
Can employers influence employees not to take part?
Employers cannot influence or prohibit entitled employees from participating in an auto-enrolment scheme. Employers are also not allowed to offer other employee incentives in place of or as a substitute to Auto-enrolment.
What if you don't do anything and/ or don't comply?
The obligation and requirement to comply with auto-enrolment
As pensions specialists, the team at Streets Financial Consulting plc*, the independent financial planning arm of Streets Chartered Accountants, are able to guide and support you through the process of establishing an auto-enrolment scheme that meets your needs and those of the pension’s regulator.
The work of financial planners includes:
- An initial consultation - an assessment is made of the workforce and a bespoke report is prepared to ascertain the impact auto-enrolment will have on the organisation from a financial and administrative perspective.
- Research and Recommendations - our financial planners research and recommend an appropriate scheme to meet Auto-enrolment requirements.
- Employee Clinic with auto-enrolment solutions and recommendations
- Scheme Implementation - providing support and assistance with the full implementation process to integrate the scheme structure.
Fees for the above are charged on a
For a free quotation and an indicative fee proposal, please use the contact form below or call 01522 536108.
*Streets Financial Consulting plc is authorised and regulated by the Financial Conduct Authority (FCA)