What is Auto Enrolment

What is Auto Enrolment

What companies need to do in order to comply with Auto Enrolment…

Before Staging:

  • Know your staging date – So you can make adequate preparations before it is too late. If you fail to enrol your employees into a Qualifying Pension Scheme by this date you will be liable for a fine.

  • Decide whether you are going to postpone enrolling your employees – In most circumstances, employers can postpone enrolling their employees into a pension scheme by up to three months. If you decide to postpone enrolment, you must inform your employees in writing. We can assist with this by producing letters for you to send to your employees.

  • Assess your workforce to decide whether they will need enrolling under Auto Enrolment – There are three categories of worker; your workforce will need assessing to see who will need automatically enrolling and who will not. The three categories are as follows:

    1. Eligible Jobholder – Any employee over the age of 22 and under state retirement age, earning over £10,000 per year must automatically be enrolled into a Qualifying Pension Scheme. Both the employer and employee will make contributions in to the employee’s pension fund.

    2. Non-Eligible Jobholders – Any employee aged between 16-74 who earns over £5824 but under £10,000 or any employee aged 16-21 or over state retirement age - 74 earning £10,000. Non-Eligible Job Holders may choose to “opt in” to the pension scheme. The employee makes contributions on all of their earnings and employers makes contributions on any earnings over £5824.

    3. Entitled Workers – Any employee aged 16-74 who earns less than £5824 a year. Employees who are Entitled Workers may choose to “opt-in” to the pension scheme. They will make contributions to their pension but there is no obligation on the employer to make contributions.

    We can assess your workforce for you and provide letters to give to your employees explaining everything they need to know.

  • Choose a pension provider and give them the details of any employees who need automatically enrolling or have opted in – We can do this for you if you elect us as a delegate with your pension provider. We can liaise with them; directly providing them with all the information they need.

At Your Staging Date:

  • Write to employees who are being automatically enrolled – Employees who are being automatically enrolled need to be informed in writing, and given the details of their pension provider and who to contact if they wish to “opt out” of the pension scheme. We can help you with this by providing you with letters to give to your employees with all the information they will need.

  • Write to all other employees explaining their rights – You also need to write to any employees who have not been automatically enrolled explaining their rights and how they can opt in to the pension scheme, should they choose to. We can provide you with letters explaining this to your employees.

  • Start making pension deductions from your employee’s wages – Our payroll software can do this for you in addition to calculating employer contributions.

  • Provide your pension provider with pension contributions for the pay period and make your first payment – We can send pension contribution information directly from our payroll software to your pension provider, meaning that all you need to do is make one payment to your provider. They will know how it has been allocated and have a record each employee’s contributions.

Continuing Obligations:

  • Continue making contributions and sending information to your pension provider – As with your first contribution, we can handle the day to day running of your pension scheme; calculating contributions and liaising directly with your pension provider, including enrolling new starters and giving them the details of employees who are no longer making contributions.

  • Continuing to assess your workforce – It is important to continue to monitor your workforce, in case any employee who was not automatically enrolled at your staging date becomes eligible for automatic enrolment. This mainly happens when an employee turns 22 or when an employee begins to earn over the threshold for automatic enrolment. This is an essential part of fulfilling your ongoing duties as an employer and failure to do so can result in a fine. We can do this for you by assessing your workforce each pay period; our payroll software can generate reports detailing any employees who will need enrolling in your pension scheme. If you have given us delegate access to your pension provider, we can also enrol them for you.

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