What is Automatic Enrolmemt?
UK employers have to automatically enrol their staff into a workplace pension if they meet certain criteria. The law on workplace pensions has now changed and every employer must comply.
There are certain employer duties you must comply with. If you fail to comply with your duties, The Pensions Regulator may take enforcement action and issue a notice and/or a penalty.
Why is Automatic Enrolment needed?
People are living longer yet too many people are under-saving or not saving at all for what could be a long retirement. The law on workplace pensions has changed to make it easier for millions more people to build up a pension, particularly those on lower incomes.
Automatic enrolment means that, rather than having to actively choose to join a pension scheme, staff are put into one by their employer as a matter of course. If they don’t want to be in the pension scheme, they must actively choose to opt out. It’s to encourage people to stay in pension saving.
Who does this apply to?
Are you an employer with staff working for you in the UK? If so, then yes, automatic enrolment does apply to you and there are things you will need to do.
Which employees does this apply to?
As an employer, you'll have new duties in relation to everyone working for you:
Some staff who don’t meet the criteria above are able to opt in to the pension scheme you’re using for automatic enrolment. You must put them in if they ask.You’ll have to pay a minimum employer contribution for all staff you put into this scheme.Certain other staff can ask to join a pension scheme. You must put these staff in a scheme, but the rules are different and there’s no requirement for you to pay an employer contribution.
When will I have to do it?
Automatic enrolment duties come into force for you from your ‘staging date’. You can find out your staging date by entering your PAYE reference into The Pension Regulators tool. It also appears on any letters they send you about your duties. For more information go to what is my staging date?
You will have the option to postpone automatic enrolment for up to three months from your staging date. If you decide to do this, you won’t need to enrol anyone until the end of the postponement period.
How does it work?
MESSAGES THE GOVERNMENT WANTS EMPLOYERS TO TELL THEIR STAFF ABOUT AUTO-ENROLMENT
- When you pay into your pension, your employer and the Government will too.
- As your employer will automatically enrol eligible workers into a workplace pension, it's a hassle free way of saving while you earn.
- Saving into a workplace pension means you can continue to enjoy the things you like when you retire.
- Don't miss out on the money from your employer and the Government.
- You could have 20 years of retirement - average life expectancy is increasing, and living longer means a longer retirement to fund.
- The state pension is a foundation for your retirement, but you may want more.
- Starting sooner means your pension will be bigger - the earlier you start, the more time your money has to grow.
- Starting sooner makes saving more manageable - saving smaller amounts over a longer time period has less impact on your current lifestyle.
- Even if you're not being automatically enrolled into a workplace pension, you can still ask to join. You might also get a contribution from your employer and the Government too.
Who pays what and how much?
Where do I start?
First you need to find out your staging date, and then work out who is eligible and who isn't. If you have a current current pension supplier, check if they qualify and that implementation is easy. Make sure to communicate to all your employees and then begin to enrol elegible workers making sure to register with the Pensions Regulator and keep records. Finally you need to select your default fund choice and then begin to make contributions to your workers’ pensions.
Sounds complicated doesn’t it?!
DON’T WORRY we are here to help.
We can manage the whole process for you for a modest one off setup fee plus a small monthly fee per payslip.
Call today for a FREE consultation. For further more in-depth information on when to start each process please feel free to email or contact us, information can be found on the contact us page.