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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 stage in 2016 and The Pension's Regulator will be writing to them 12 months prior to their staging date. They will inform employers that they need to start preparing immediately, with the nomination of a point-of-contact and the development of a plan. 

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 circumstances it may be possible for an employer to move their staging date back to a prescribed date between August 01 2015 and April 01 2017.

New employers setting up a new business from April 01 2012 up to and including September 30 2017 will have a staging date between May 01 2017 and February 01 2018. Such dates are based on when the employer first pays PAYE and not the number of people employed.

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 ideally you need to start looking at the implications and implementation of auto-enrolment 12 months prior to your staging date - the date at which you are required to have a qualifying scheme in place.

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, however this might not be appropriate, in that it doesn’t include or is not open to all employees. You will need to check if it does or could comply and whether you can enrol other employees into it. It may be that an alternative appropriate pension scheme will need to be set up.

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?

If, like many organisations and employers, you don’t have a pensions scheme in place then you will need to find one. Such schemes include the National Employment Savings Trust (NEST), which has a public service obligation to accept all employers that apply to join it. This obligation is regardless of employee numbers or the overall value of contributions.

Details of other providers can be obtained by contacting Streets Financial Consulting plc* - please email 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 implementation it is much easier to deal with than those with a much smaller number of employees who will undoubtedly find the task a significant chore and burden.

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.

Others, including those initially thinking they will do it themselves, may find it more appropriate to seek external advice and support.

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 auto-enrolment you will no doubt have to look at your payroll software and processes to ascertain if they are robust enough to deal with the new guidelines. One key aspect will be the need to have records of those employees that have been informed of the pension scheme and have been given the option to opt out, with records kept of those choosing to opt out.

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

Employee status and contracts of employment

As part of the process of adopting auto-enrolment you will need to review contracts of employment, the employee handbook and your process of employee engagement to ensure they are compliant and that they take into account the changes.

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 rests with the employer. Those employers who fail to comply or meet the regulator’s requirements will be required to rectify any non compliance. Those that fail to comply, whether unintentionally or not, will face the enforcement powers of the Pensions Regulator. Such enforcements can range from informal action and guidance, through to statutory notices to comply and ultimately financial penalties. Such penalties start with a fixed penalty fine of £400 escalating to daily fines of between £50 and £10,000 where employers have failed to comply.

Useful contacts

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 time spent basis with fee quotations provided on request and prior to commencement of any work.

For a free quotation and an indicative fee proposal, please use the contact form below or call 01522 536108.

To download our Step by Step Guide please click here

*Streets Financial Consulting plc is authorised and regulated by the Financial Conduct Authority (FCA)

Contact Streets about auto-enrolment

For more information and to benefit from our considerable expertise and experience of working on a wide range of accountancy projects, please contact us through the form below, or contact your local team.

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