Skip to Navigation

Call 01709 513811 or email info@hawley-wood.co.uk

Auto-enrolment

This guide is designed to help you understand your responsibilities as a business. As your adviser we can help your business prepare and maintain an auto-enrolment solution. Please contact us to discuss your needs.

What are the changes?

As an employer you will be legally obliged to automatically enrol certain members of your staff into a qualifying pension scheme and to make a contribution towards it. When your business will need to do this will depend on your staging date - see details below.

What will I have to do?

  • To comply with the law, employers will have to:
  • provide a qualifying pension scheme
  • automatically enrol eligible jobholders
  • pay employer contributions for eligible jobholders
  • tell all eligible jobholders that they have been automatically enrolled and that they have the right to opt out
  • register with the Pensions Regulator and provide details of your pension scheme and the number of people you have automatically enrolled

When are the changes coming in?

The reforms are being rolled out from 1 October 2012, starting with companies with the largest PAYE schemes first. The criteria has changed from number of workers to size of PAYE scheme, which means that some small employers that had less than 50 workers at 1 April 2012 but more than 50 in their PAYE scheme may have had their date brought forward, in which case it is possible to move to a later prescribed date.

For those with PAYE schemes with fewer than 50 members the staging date will depend on the size of PAYE scheme and reference numbers. If this applies to you, please contact us or the Pensions Regulator for information on your staging date, otherwise use the table below:

 

PAYE scheme size or reference

Staging date

120,000 or more

01-Oct-12

50,000-119,999

01-Nov-12

30,000-49,999

01-Jan-13

20,000-29,999

01-Feb-13

10,000-19,999

01-Mar-13

6,000-9,999

01-Apr-13

4,100-5,999

01-May-13

4,000-4,099

01-Jun-13

3,000-3,999

01-Jul-13

2,000-2,999

01-Aug-13

1,250-1,999

01-Sep-13

800-1,249

01-Oct-13

500-799

01-Nov-13

350-499

01-Jan-14

250-349

01-Feb-14

160-249

01-Apr-14

90-159

01-May-14

62-89

01-Jul-14

61

01-Aug-14

60

01-Oct-14

59

01-Nov-14

58

01-Jan-15

54-57

01-Mar-15

50-53

01-Apr-15

Who needs to be enrolled?

Workers known as 'eligible jobholders' will need to be enrolled. These are defined as:

  • those that work or ordinarily work in the UK
  • aged between 22 and state pension age
  • earning more than the minimum earnings threshold £10,000 for 2014/15.

Those earning more than £5,824 will also be eligible, but you will not be obliged to contribute on their behalf.

What classes as a qualifying pension scheme?

The Government has created the National Employment Savings Trust (NEST) for those employers that don't already have a suitable auto-enrolment pension scheme. NEST ticks the auto-enrolment boxes, but you do not have to use NEST.

You may be able to use your existing pension scheme, provided it meets certain criteria.

We can help you to establish whether your existing scheme is auto-enrolment suitable, or what changes you would need to make for it to become compliant. Please contact us to find out more.

How much will I have to contribute?

You will be expected to contribute a minimum amount into the qualifying pension scheme of eligible jobholders. This is expressed as a percentage of qualifying earnings between the upper and lower threshold - £5,824 and £43,000 respectively for the tax year 2014/15.

Contribution levels are being phased in until 1 October 2018. The proposed duration periods for defined contribution schemes are as follows:

Transitional period

Duration

Employer minimum contribution

Total minimum contribution

1

Staging date to 30 September 2017

1 per cent

2 per cent

2

1 October 2017 to 30 September 2018

2 per cent

5 per cent

1 October 2018 onwards

3 per cent

8 per cent

A scheme can also base the contributions on one of three alternatives to qualifying earnings, which may change the minimum contribution. Contact us or see the Pensions Regulator website for more information.

What should I do next?

There are a number of steps you should be considering now in preparation for your staging date. Here are some points to consider:

  1.  Find out when your staging date is so that you know how long you have to prepare
  2. Assess your workforce using the Pension Regulator's criteria to work out who you need to automatically enrol
  3. Review your pension provisions – you may have an existing scheme that will qualify, or you may need to make a few amendments or start from scratch.
  4. Communicate what is happening and when to your employees.

Employees are entitled to voluntarily opt out of auto-enrolment but there are a number of safeguards in place to prevent this being recommended by the employer.

We can help you to prepare for auto-enrolment and its potential impact. Please contact us to find out more.

Give us a call on

Hawley & Wood Independent Financial Advisers Ltd © 2019