Auto-enrolment will require employers to enrol eligible staff onto a workplace pension scheme. The scheme is administered by the Pensions Regulator. The Government, employers and employees are then required to jointly contribute towards the employee’s pension pot. The scheme applies whether you employ one or thousand employees.

Affected employers are recommended to make automate pension contributions via their payroll system. If you are worried then we advise you to consider seeking the services of an auto enrolment payroll company.

The word ‘auto’ in ‘auto enrolment’ was chosen by the Government because those eligible are automatically enrolled without gaining their express consent. However, there does exist a right to opt-out of the scheme.

The scheme is automatic from the employee’s perspective, but not from the employer’s perspective. The onus is thus put onto the employer to enrol eligible employees onto a suitable pension scheme.

A brief overview of the stages involved in setting up such a scheme is given below:

  1. Set up an eligible pension scheme. See below for rules regarding eligibility
  2. Enrol eligible staff on the pension scheme
  3. Complete a declaration of compliance outlining how you’ve complied with your obligations

When is the deadline date?

Auto-enrolment must be in force on or before your staging date. To learn your ‘staging date’ please click here. You must have your PAYE reference to hand. For the majority of employers the staging date will be between 1st May 2017 and 1st February 2018.

Employers have six weeks from their staging date in which to enrol eligible employees with their elected pension provider.

Employee eligibility

Eligibility is based on employees’ age and earnings. Staff aged between 22 and 66 years who earn at least £833 per month gross must be automatically enrolled.

Please see the table below for an overview of eligibility rules:

Obligation to write to all affected staff

The law requires you to write to staff affected within six weeks of your staging date :

  • You must write to staff who are being automatically enrolled explaining what you’ve done and providing details of the pension scheme you’ve chosen for them, their right to opt-out and that money will be deducted from their wages and transferred into their pension
  • You must write to staff who have a right to opt into an automatic enrolment pension scheme explaining how automatic enrolment applies to them
  • You must write to staff who have a right to join a pension scheme explaining how automatic enrolment applies to them

Click here to read sample letters you may use for this purpose.

Your right to delay automatic enrolment

You may postpone the commencement of automatic enrolment by up to three months following your staging date. You must write to each affected employee explaining your decision to do so.

Minimum payment requirements

The minimum amount of money the employee and employer must pay into the pension is outlined in the table below:

Click here to view the employer’s ‘contributions calculator’ hosted on the Pensions Regulator’s website.

Does my current pension scheme qualify?

If your current pension scheme meets set-criteria you may continue using it for the purposes of complying with auto-enrolment. Pension eligibility criteria is complex and beyond the scope of this post, but generally the scheme must not be administered outside the European Economic Area and must not require eligible employees to fill out an application form in order to enrol .

Eligibility criteria differs for different types of pension schemes e.g. defined contributions (DC) or Defined Benefit (DB). Click here for more information on pension fund eligibility criteria.

Choosing a pension scheme

Click here to view a list of private pension providers. The National Employment Saving Trust is a Government-run scheme you may choose to comply with auto-enrolment.

Employers have six weeks from their staging date in which to enrol eligible employees with their elected pension provider.

Duty to keep records

You must retain auto-enrolment records. Below we list example records you must retain:

  • The names and addresses of those you've enrolled
  • Records that show when contributions were paid
  • Any opt-in and opt-out requests
  • Your pension scheme reference or registry number
  • Any information you send to your pension provider

The law requires employers to retain documents relating to auto-enrolment for a period no less than six years. Opt-out notices received from employees must be retained for a period no less than four years.

Declaration of compliance

Once staff are enrolled into a workplace pension scheme you must complete an online ‘declaration of compliance’. The declaration demonstrates to the regulator how you’ve complied with your legal duties relating to auto enrolment. This declaration must be submitted no later than five months following your staging date.

Click here to read the declaration of compliance checklist.

Also view the declaration of compliance webinar.

Click here to complete your declaration online.

Useful Links