AUTOMATIC ENROLMENT

Auto Enrolment

The law on workplace pensions has changed. Under the Pensions Act 2008, every employer in the UK must put certain staff into a pension scheme and contribute towards it. This is called ‘automatic enrolment.’ If you employ at least one person you are an employer and you have certain legal duties.

Don't ignore the workplace pensionAs an accountant, and business adviser, employers are likely to ask you for help to choose and run a good quality pension scheme for automatic enrolment, and it’s not just about pensions – automatic enrolment will impact upon most areas of your clients' businesses.

The information provided on this page is intended as a quick reference for you, more detailed information and guidance is provided on The Pensions Regulator website.

RESOURCES

CHOOSING A PENSION SCHEME FOR AE – GUIDANCE FOR BUSINESS ADVISERS

The Pensions Regulator published additional guidance for business advisers helping their clients to select a pension scheme, as well as an ‘at a glance’ PDF guide. Links to the relevant pages are as follows:

LATEST INSIGHT FROM THE PENSIONS REGULATOR

Do you have clients who are thinking about becoming an employer? Make sure they’re ready for automatic enrolment

New employer need to know

Taking on staff is an essential part of growing a business. If your client is thinking of employing someone for the first time, there are a number of things to consider, such as deciding how much to pay, checking if someone has the legal right to work in the UK, determining whether you need to register as anemployer with HMRC, taking out employer’s liability insurance, among others.  

Getting ready for automatic enrolment is just one of these steps. The Pensions Regulator (TPR) is responsible for ensuring that all employers comply with workplace pension law. It’s important that your clients understand what they’ll need to do and the date that the law will apply to them, so that they don’t risk a fine.

The date that their duties start will depend on when they employ their first worker, as this date will determine whether they will have a staging date, or whether their duties will begin immediately their member of staff starts work.  The table below provides a summary:

 

When do their duties start?

 

Useful link

Employers on or before 1 April 2012

Will have a staging date  – up to 1 April 2017

www.tpr.gov.uk/ae-checker

Employers on or before 1 April 2017 with no PAYE scheme

1 April 2017

www.tpr.gov.uk/employers

Employers after 1 April 2012 and up to and including 30 September 2017 with PAYE scheme

Will have a staging date – between 1 May 2017 and 1 February 2018*

www.tpr.gov.uk/ae-checker

Employers after 1 April 2017 with no PAYE scheme

Will not have a staging date – their duties will start from the day that their first member of staff starts work

www.tpr.gov.uk/new-employers

Employers from 1 October 2017 onwards

Will not have a staging date – their duties will start from the day that their first member of staff starts work

www.tpr.gov.uk/new-employers

* More detailed information about when the duties will apply to new employers can be found on TPR’s website – www.tpr.gov.uk/business-advisers 

What will a new employer need to do to meet their automatic enrolment duties?

Automatic enrolment duties apply to all employers. They’ll need to:

-assess their staff and, if any meet the age and earnings criteria, put them into a pension scheme for automatic enrolment, and pay into it. 

-write to each member of staff (whether or not they meet the age and earnings criteria to be put into a pension scheme) to tell them how automatic enrolment applies to them.

-tell The Pensions Regulator how they’ve met their duties by completing and submitting a declaration of compliance within five months of the date their duties started.

-manage their ongoing duties, which include continuing to monitor the age and earnings of existing and new staff on every pay date to see if they need to be put into a pension scheme, and how much needs to be paid in. Every three years, they’ll also need to re-enrol staff opting-out of automatic enrolment, and put them back onto a pension scheme.

How do automatic enrolment duties apply to clients who don’t use a PAYE scheme?

If you have a client who becomes an employer after 1 April who doesn’t use a PAYE scheme to pay their staff, then they will not have a staging date. 

NB: If their staff earn £113 per week (£490 a month) or below, HMRC may not require them to set up a PAYE scheme. 

However, your client does still have certain automatic enrolment duties, and must start to complete them as soon as they employ their first member of staff:

-they must write to their staff to tell them how automatic enrolment applies to them 

-if their staff then ask in writing to be put into a pension scheme, your client must set this up for them but they do not have to pay into it

When your client starts paying a member of staff more than £113 per week, they must set up a PAYE scheme with HMRC. They must also assess their members of staff to work out if they need to be put into a pension scheme that your client must also pay into.

After your client has set up their PAYE scheme, we'll write to them and ask them to complete a declaration of compliance by a specific date, which is where they tell us how they've met their duties..

How do the duties apply to directors?

In some cases, directors may be exempt, depending on whether they have an employment contract and who else is working for the organisation. Duties start to apply when a worker who has a contract of employment starts working for the organisation. TPR has more information about how automatic enrolment duties apply to director-only businesses on their website. 

Useful links

For clients – www.tpr.gov.uk/employers

For business advisers – www.tpr.gov.uk/business-advisers 

For director-only businesses – www.tpr.gov.uk/director-exemptions-from-automatic-enrolment  

 

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