Guide to Auto Enrolment – The overview

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It’s unlikely you haven’t already heard about Automatic Enrolment, but for those who haven’t; Auto Enrolment is a new requirement imposed on employers in the United Kingdom under the pension reform laws. UK employers must therefore enrol eligible jobholders into a qualifying pension scheme and make the required minimum contributions into their employees’ pension schemes.

Who should be enrolled in a pension scheme at my business?

As an employer, it is your duty to enrol workers who meet the following qualifications:

  • They are between the ages of 22 and State Pension age
  • Earn more than £10,000 per year
  • Work in the United Kingdom

There are some exceptions though; any worker earning less than £10,000 per year needs to request enrolment in the pension fund. If their monthly gross earnings are between £486 and £833, employers must pay regular contributions into their pension schemes, but not if their monthly gross earnings are £486 or less.

Employees under the age of 22 or over the State Pension Age and still working can also request to opt in if they wish.

Who needs to do this and what happens if I don’t?

All businesses, except individuals who are self-employed are affected by the scheme. Those who do not comply with the new workplace pension scheme will face fines and prosecutions, not to mention loss of credibility.

What do I do next?

All action requirements are based around your ‘staging date’; this is largely determined by the size of your business. The biggest firms have already passed their staging dates but many small to medium businesses are still up coming. If you are unsure of your staging date, then check with The Pensions Regulator.

6 Steps to Automatic Enrolment

1. Twelve to Nine Months before Staging

  • Know when you need to be ready by
  • Provide a point of contact
  • Develop your initial plans

2. Nine to Zero Months before Staging

  • Find out who needs to be enrolled
  • Choose your software and check records
  • Choose the relevant pension scheme

3. Staging Date

  • Ensure all required staff are Automatically enrolled

4. Up to Six Weeks after Staging Date

  • You can postpone the first time you assess and enrol your employees into your pension scheme but you must issue them a postponement notice within 6 weeks of staging date. You can postpone for a maximum period of 3 months

5. Up to Five Months after Staging Date

  • Complete your declaration of compliance (registration)

6. Ongoing

  • Maintain records
  • Fulfil all ongoing responsibilities

 

Source: Zywave

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