Automatic Enrolment – Workplace Pensions
The UK Government is keen for most workers to have the opportunity to contribute to saving for a pension. As a result, new legislation has been introduced stating every employer employing at least one employee must have a workplace pension scheme in place. “Auto-enrolment” is a quick way of describing the new duties on Employers to enrol their employees into a pension scheme as and where applicable.
A workplace pension scheme comes into force on the start date of the Employer’s first employee. Not all employees will be eligible for auto-enrolment: pension contributions are earnings related and only become payable if assessed earnings fall into a particular category.
What does Auto-enrolment mean to an Employer?
- The Pensions Regulator (TPR) is the public body that protects workplace pensions in the UK. The TPR will communicate with Employers to:
- Advise when your legal duties as an Employer are due to start
- Impose fixed penalties along with further daily interest if you do not comply with your duties as an Employer in setting up and offering a pension scheme to eligible employees.
- Advise when re-assessment period is due (after 3 years of the initial setup of pension scheme).
What you need to do to prepare for Auto-enrolment:
- Choose a pension provider and set up a pension scheme
- Decide how to manage your pension scheme
- Assess your employees periodically to see who needs to be auto-enrolled
- Inform your PA’s about:
- The scheme you have chosen
- How much they will have to pay into the scheme
- How much you as the employer will pay into the scheme
- Their rights to opt in or out of the scheme
You will also have ongoing responsibilities to:
- forward all contributions (employer & employee) to the pension provider within a set timescale
- keep records of:
- payments sent to pension provider;
- requests from workers to opt out of scheme;
- check every payday to see if any workers now qualify for auto-enrolment (eg reached aged 22);
- auto enrol your PAs again every 3 years on the anniversary of your staging date or every 18 months if you as the employer choose to pay higher contributions.
If you use LCIL’s payroll service, we will help you with all this. We will also be offering information sessions/workshops on this topic and will send out booking forms very soon. We strongly encourage you to work with us on this so that you have everything in place, on time and with as little stress as possible.
In the meantime, if you receive any correspondence from The Pensions Regulator please keep it safe, or send in a copy to LCIL so we can support you to comply with this new legislation (see contact details here).
LCIL is currently talking to the four Lothian local authorities about auto-enrolment so that they are ready too and able to tell employers how these new pension costs will be funded. These changes will also involve a lot more work for LCIL’s payroll service so LCIL will also be discussing with local authorities how they will fund this increased level of support.
For more information on Pension Auto-Enrolment if you are a Payroll service user please call: 0131 475 2350