Workplace pensions law has changed and the automatic enrolment came in to effect from 1 October 2012.
Staging Dates
The date that the new law applies to your company is known as your staging date. This date is determined by the size of your PAYE scheme:
- The largest employers have staging dates that have become effective from 1 October 2012. Employers with between 250 – 2,000 workers will have staging dates between 1 September 2013 – 1 February 2014
- Employers with between 50 – 250 employees will have staging dates from 1 April 2014 to 1 April 2015.
- If you employed fewer than 50 workers on 1 April 2012 your staging date will fall between 1 August 2015 and 1 April 2017.
To check your staging date please visit:
http://www.thepensionsregulator.gov.uk/employers/tools/staging-date.aspx
Assessing your workforce
You will have to assess all your staff for eligibility but you may not have to automatically enrol all of them. The table below outlines your duties depending on the salary of your staff member.
|
Monthly earnings
|
Age
|
||
|
From 16
to 21
|
From 22 to SPA*
|
From SPA to 74
|
|
|
£486 and below
|
Has a right to join a pension scheme
|
||
|
Over £486 up to £833
|
Has a right to opt in
|
||
|
Over £833
|
Has a
right to
opt in
|
Automatically
enrol
|
Has a right to opt in
|
figures correct as of 2015/2016. *SPA = state pension age
Reviewing your pension arrangements
If you have an existing pension scheme for your workers, you may wish to consider enrolling all eligible jobholders into this scheme. To do this, your existing scheme will need to qualify as an automatic enrolment scheme
If your existing scheme does not qualify, you may be able to change the scheme rules or amend the terms of the policy so you will be able to use it for automatic enrolment.
If you do not have an existing pension scheme or you cannot use your existing scheme for automatic enrolment, you will need to choose another pension scheme. In this case, all eligible jobholders will need to be automatically enrolled in your new pension scheme.
Choosing a qualifying pension scheme
If you need to select a qualifying pension scheme, you can choose from a number of pension providers including the National Employment Savings Trust (NEST).
For further advice or assistance in choosing a scheme you can find general information on the following websites:
www.pensionsadvisoryservice.org.uk
www.thepensionsregulator.gov.uk
Minimum employer contributions
The minimum contribution rates that an employer must pay into their worker’s pension scheme are being introduced gradually. This is known as ‘phasing’. Phasing applies to most, though not all, types of pension.
The minimum contributions are currently a total contribution of 2% with at least 1% being employer contribution.
| Transitional period | Duration | Employer minimum contribution | Total minimum contribution |
| 1 | Employer’s staging date to 20 September 2017 | 1% | 2% |
| 2 | 1 October 2017 to 30 September 2018 | 2% | 5% |
| 1 October 2018 onwards | 3% | 8% |
Compliance and Penalties
Failure by employers to comply with Auto Enrolment regulations will carry penalties.
The Pension Regulator (TPR) will be able to issue a Fixed Penalty Notice of £400.00 to any employer who fails to comply with a statutory notice. If the employer fails to pay the penalty and remedy the breach, the regulator may then issue escalating (daily) penalties.
The table below illustrates the escalating penalties that might be applied to employers for breaches of their automatic enrolment duties.
| Number of Employees | Penalty (Daily Rate) |
| 1-4 | £50.00 |
| 5-49 | £500.00 |
| 50-249 | £2,500.00 |
| 250-499 | £5,000.00 |
| 500+ | £10,000.00 |
If you have any questions about Auto Enrolment please speak to your usual Hillier Hopkins contact or call us on 0330 024 3200.