Auto Enrolment for Employers

By: In2Accounting

Auto Enrolment requires employers to enrol eligible workers into a workplace pension scheme. Every employer is affected even if you only employ 1 person. The new regulations will be enforced by the Pensions Regulator.

When the UK government found too few workers were putting money into a pension, they introduced a new law – called automatic enrolment or ‘auto enrolment’ – to help fix the problem.

This means every employer must automatically enrol workers into a workplace pension scheme if they are aged between 22 and the state pension age, earn more than £10,000 a year and work in the UK. This automatic enrolment is automatic from the employee perspective only – as an employer there are things which you need to do.

When is your Deadline/Staging Date?

Employers have been given various staging dates. These are dates on which they must start enrolling employees into workplace pension schemes. Staging started in 2012 and will continue until 2018 by which time companies of all sizes must be compliant.

You can find out your exact staging date on the Pensions Regulator Website.

You simply need to enter your PAYE reference number.

The PAYE Reference can be found on letters you have received from The Pensions Regulator about automatic enrolment. Alternatively, it can be found on the letter HMRC sent you when you first registered as an employer, or from your payroll software package.

  1. DUTY TO ASSESS YOUR EMPLOYEES

As an employer, you must auto enrol your qualifying employees into a qualifying pension scheme. They can choose to voluntarily opt out of the scheme, however, this should not be due to any persuasion from you as their employer.

An employee’s eligibility is based on an employee’s age and earnings.

Automatic Enrolment applies to:  

Those aged between 22 and 66 years

who earn at least £192 per week or £833 per month gross

Those younger than 22 or older than 66 have a right to opt-in to an eligible pension scheme but it is not automatic. Anyone earning less than £192 per week or £833 per month gross, cannot be enrolled in the scheme.

This table summarise Employee Eligibility

DO YOUR EMPLOYEES QUALIFY FOR AUTO ENROLMENT
AUTOMATIC ENROLLMENT MANUAL ENROLLMENT NOT ELIGIBLE
SALARY: > £10000 gross per year SALARY: > £10000 gross per year SALARY <£10000 gross per year
AGE: 22 to 66 AGE: <22 years

AGE: >66 years

  1. YOUR DUTY TO ENROL QUALIFYING STAFF

You need to automatically enrol eligible jobholders into a qualifying pension scheme, and

make employer contributions on their behalf into that pension scheme.

Find a scheme here

  1. YOUR DUTY TO KEEP RECORDS

You must keep records to show that you have complied with Auto Enrolment. The law requires employers to retain documents relating to auto-enrolment for a period no less than six years.

  1. YOUR DUTY TO LET YOUR EMPLOYEES KNOW

You are required to write to each of your employees after your staging date to inform them of the changes:

  • their auto enrolment rights
  • how automatic enrolment applies to them
  • what you’ve done for them
  • why you’ve done it
  • the details of the pension scheme you’ve chosen for them
  • what contributions will be deducted from their pay
  • that they have a right to opt out of your pension scheme if they wish to.
  1. YOUR DUTY TO MAKE A DECLARATION OF COMPLIANCE

You need to let the Pensions Regulator know that you have complete your the enrolment process.

You can do this by visiting the following link.

You will need your government gateway ID and employer reference number, PAYE scheme reference(s) for all PAYE schemes the employer use, details of the Pension Scheme you have chosen and more.

 

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