Auto - Enrolment

What Is Auto-Enrolment?

Auto-enrolment will mean workers being automatically enrolled into their employer's qualifying pension scheme without any active decision on their part. At present, many workers fail to take up valuable pension benefits because they do not make an application to join their employer's scheme. Auto-enrolment is meant to overcome this.

From 1 October 2012 (subject to the employer's own staging date), all eligible workers will have to be auto-enrolled into a qualifying pension scheme.  Employers can choose the qualifying scheme they use, which could include NEST (the National Employment Savings Trust).  Each qualifying scheme must meet minimum standards in respect of the benefits it provides or the amount of contributions paid to it.  The scheme must also provide auto-enrolment for all eligible workers and for all new workers when they become eligible.
 

The Basics

The new employer duties are in force. It is important for an employer to check their staging date.Under these duties, employers will have to:

Gradual Introduction Of Auto-Enrolment

Bestween October 2012 and October 2018 all eligible works will need to be Auto-Enrolled. An individual employers' own duties will be introduced gradually over this period. Typically the larger employers are enrolled first 

For further unbiased information see the Pension Advisory Service www.pensionsadvisoryservice.org.uk

Minimum Contributions

Your employer pays: You pay: The Government adds tax relief of: Total contribution
1.0% of your qualifying earnings until September 2017 rising to 2.0% from October 2017 to September 2018 then rising to 3.0% from October 2018 0.8% of your qualifying earnings until September 2017 rising to 2.4% from October 2017 to September 2018 then rising to 4.0% from October 2018 0.2% of your qualifying earnings until September 2017 rising to 0.6% from October 2017 to September 2018 then rising to 1.0% from October 2018 2.0% of your qualifying earnings until September 2017 rising to 5.0% from October 2017 to September 2018 then rising to 8.0% from October 2018

Opting Out

Workers will be able to opt-out of their employer's scheme if they choose not to participate.  Workers who give notice during the formal opt-out period will be put back in the position they would have been in if they had not become members in the first place, which may include a refund of any contributions taken following automatic enrolment. 

Employer Duties

In summary employers will need to:

 

Where an IFA can help you

In order to help employers comply with the new legislation our approved IFAs will be able to offer the following services:

 If you would like further information or advice regarding Auto - Enrolment plase enquire through our Contact Us page.

  • enrol eligible workers into a qualifying workplace pension arrangement;
  • choose the qualifying scheme(s) they adopt to meet the requirements
  • Alternatively offer membership to another scheme that meets the requirement and standards
  • Collect payments from salary and pay contributions on time.
  • Keep records to ensure compliance with the regulations

An eligible worker is an employee aged between 22 and state pension age and earning above the income tax personal allowance (£10,000 2014/15).  Contributions will be payable on qualifying earnings.

Employers will also have an on-going duty to maintain qualifying pension provision for workers who; are already members of qualifying schemes; or become members of such schemes.

  • ENSURE - you meet the requirements with minimal disruption to your businesses. 
  • Provide advice to the employer
  • Calculate the cost auto-enrolment will add to your business
  • Calculating the correct pension contributions to be made from payroll data each month. 
  • Store and generate documents needed to meet the regulatory requirements automatically
  • Provide an online system and service to ensure maximum efficiency
  • Provide advice to members where necessary
  • Assess if your existing company or group pension can meet the new requirements
  • Highlight any changes that need to be made and advise on the best course of action
  • Link with your accountants software if necessary  

 

 
  • Automatically enrol eligible works into a pension scheme
  • Make contributions on their workers behalf
  • Register with The Pension Regulator
  • Provide workers with information about the changes and how they will affect them
  • Keep accurate records regarding pension contribution

More detailed information is available from The Pension Regulator or via our Contact Us page.