Automatic Enrolment was introduced to encourage the UK workforce to save for their retirement, as they may need an additional source of income on top of the state pension when they retire. Employers have duties as soon as they employ their first member of staff. Here at Astria, we take care of Automatic Enrolment for our clients and ensure they are compliant.
Automatic Enrolment is regulated by The Pensions Regulator (TPR) who monitor and ensure compliance across the UK https://www.thepensionsregulator.gov.uk/en/about-us/what-tpr-does-and-who-we-are.
TPR have the authority to issue significant fines to companies who are not compliant with pension legislation, so it is important to understand what is required.
Pension duties affect all employers, even if none of the staff want to join the pension scheme. If it’s a director only company, then they must declare to The Pensions Regulator that they are not an employer for the purposes of automatic enrolment.
Choosing a company pension scheme for automatic enrolment
The employer must decide on the pension scheme, and it should meet automatic enrolment standards. Consider factors such as employer and employee charges, the tax relief method and the investment options offered.
Who should be automatically Enrolled?
Employees should be automatically Enrolled if they meet the age and earnings criteria: they are aged at least 22 and under State Pension Age, and their earnings exceed £833 per month (eligible jobholders). The automatic enrolment of new starters can be postponed by three months. Once a member of the pension scheme, contributions will be deducted from their pay each payday, and the employer must also contribute to their pension pot. The current minimum contribution levels are 5% for the employee, and 3% for the employer.
Employees that don’t meet the age and earnings criteria may be able to opt-in to the pension scheme if they wish. Whether the employer must also contribute will depend on how much the employee earns.
Can employees opt-out?
Employees can opt-out within one month of the date of their automatic enrolment, and any pension deductions that were previously taken from their pay will be refunded. If they wish to opt-out it is essential that they contact the pension provider directly.
Re-enrolment
Every three years employers must re-enroll any eligible members of staff that previously opted out of the pension scheme. This process is known as Cyclical Re-Enrolment. Employers must submit a re-declaration of compliance form to The Pensions Regulator to confirm if any details have changed and to summarise the results of re-enrolment.
Regulatory Pension Letters
Employers must issue pension letters to their staff at various times to keep them informed of the Automatic Enrolment process and to remain compliant.
How can we help?
Automatic Enrolment duties can be time-consuming and it’s important that it’s done correctly.
We offer a comprehensive Automatic Enrolment Service, and our team of experienced payroll administrators will ensure you remain compliant with legislation. We have vast experience in calculating and uploading contributions to numerous pension providers, so whichever scheme you choose, we can help.
Every time we process your payroll, we perform a pension assessment on all employees, enroll those who have met the criteria that period, calculate the contributions due, and upload them directly to your pension provider.
At various points in the process, we provide regulatory letters on your behalf direct to your employees via our portal. Letters are produced when employees are postponed, enrolled, if they are not eligible for automatic enrolment, or if they are re-enrolled. The employee can also expect to receive a welcome pack from the pension provider.
If you choose a NEST scheme, which is the government’s scheme, we can set this up on your behalf https://www.nestpensions.org.uk/schemeweb/nest/careers/about-us.html.
If you have any questions regarding the pension process then please contact us.
