Auto-enrolment – keeping on top of requirements
Nov 03, 2017
Unfortunately, as an employer, complying with auto-enrolment doesn’t just mean registering your employees by your staging date deadline and then sitting back, job done. It may seem tedious, but there are further actions and changes which you need to follow up on if you’re going to remain compliant.
Increase in contributions
Since its introduction, contributions for auto enrolment have been set at 1% from the employer and 1% from the employee. However, the plan set out by The Pensions Regulator has always been for these contributions to gradually increase over time. The first of these increases takes place from 6 April 2018, when the minimum amount an employer will have to contribute goes up to 2%, and an employee will start contributing 3%. On 6 April 2019 this will rise again to 3% from employers and 5% from employees.
If you are an employer it is your responsibility to ensure that your payroll software or your payroll bureau is set up to process these increases. Remember too that you must let your staff know how their contributions are changing – some payroll software, such as Brightpay, has the facility to produce these pension letters for you. If you need help working out costs for your members of staff, you can use The Pensions Regulator’s online contributions calculator.
Three years after your initial auto enrolment staging date, you will have to automatically re-enrol into your pension scheme any member of staff who has previously opted out. Keep in mind when your three year anniversary will fall, as this will incur further action on your part:
- You’ll need to choose your re-enrolment date – this can be anytime within a six month period, starting three months before the third anniversary of your staging date and finishing three months after it. Once selected, this date is fixed for all future triennial reviews.
- You’ll then need to assess your staff on your chosen re-enrolment date, and decide who will need to be entered back into your pension scheme.
- Within six weeks of your re-enrolment date you must write to your employees and tell them that they’ve been put back into a pension scheme.
- Lastly, within five months of the third anniversary of your staging date, you must complete your re-declaration of compliance and inform The Pensions Regulator how you’ve met your legal duties (note that even if you have no staff to re-enrol, you’ll still need to complete a re-declaration of compliance).
Meeting your re-enrolment and re-declaration duties is as important as meeting your initial staging date, and if you don’t comply you could be fined.
New businesses set up after October 2016
If you set up your business between October 2016 and June 2017, your staging date will be 1 January 2018. If you set up your business between July 2017 and September 2017, then your staging date will be 1 February 2018.
If you’ve set up a new business with employees after 1 October 2017, you need to be aware that your auto enrolment obligations begin immediately. You need to assess your employees, and if necessary, set up a scheme and enrol all eligible employees.
The Pensions Regulator will send out letters to any employers who fall into these camps, and inform you of your staging date, your duties and your deadlines.
If you have any questions about your auto enrolment responsibilities, please get in touch and we’ll be happy to help.