Auto Enrolment Rolls on for Another Year

Auto Enrolment Contributions

Beginning the 6 April 2018, employers may be required to increase the amount of contributions into their employees’ Auto Enrolment schemes.

The contribution levels will also rise again in a further year’s time, with employers paying a minimum of 3% towards the pension and the total minimum contribution reaching 8%, the employee making up the shortfall.

If as an employer you have already agreed to pay the total minimum contribution, then it will not affect employees, unless the particular scheme rules require an employee contribution. Of course, the employee and employer can agree to contribute more than the minimum, should they wish.

The table below shows the phases of contribution increases:

Dates

Total Minimum Contribution

Minimum Employer Contribution

Up to 5 April 18

2%

1%

6 April 18 to 5 April 19

5%

2%

From 6 April 19

8%

3%

If you require help in administering your payroll and pension scheme our payroll team will be happy to help.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Pensions Re-Enrolment: Don’t Get Caught Out

Pension re-enolment

As an employer, did you know that you have a legal duty to re-enrol certain employees back into an automatic pension scheme every three years, even if they opted out the first time? Failure to do so could result in a penalty…

If you were one of the thousands of businesses that auto-enrolled employees in 2014, you may be approaching the crucial re-enrolment phase, which should take place approximately three years after your original staging date.

Employers are required to complete the re-declaration of compliance with The Pensions Regulator (TPR), even if they do not have any staff to re-enrol. The main qualifying threshold or ‘trigger’ for employees to be automatically enrolled has been maintained at £10,000 per annum for 2017/18.

Consider the following steps to help ensure that you meet your legal obligations and avoid a potential penalty.

Step one: Choose your re-enrolment date

You have a six month window from which you can choose a date for re-enrolment – this can be either three months before or after the third anniversary of your original staging date. Employers cannot opt to postpone their re-enrolment date, so be sure to choose a date that is achievable for your firm.

Tip: Check your payroll systems and personnel are prepared to deal with a potential increase in employees who may need to be re-enrolled.

Step two: Re-assess your workforce

TPR stipulates that you only need to assess employees who were previously auto-enrolled and have subsequently either:

  • asked to leave (opted out of) the pension scheme
  • left the pension scheme after the end of the opt-out period
  • stopped or reduced their pension contributions to below the minimum level (and who meet the age and earnings criteria to be re-enrolled).

You are not required to reassess employees who:

  • are currently in the pension auto-enrolment scheme (and meeting the minimum contribution requirements)
  • are aged 21 or under
  • are of or over the state pension age
  • do not meet the age and earnings criteria for automatic enrolment.

Following assessment, you should re-enrol eligible staff into a qualifying pension and begin making contributions within six weeks of your re-enrolment date.

Tip: Don’t forget to continually monitor employees’ ages and earnings, which may change their eligibility status.

Step three: Write to those staff that you’ve re-enrolled

You should write to each employee who has been re-enrolled into the pension scheme. This should be done within six weeks of your re-enrolment date.

Tip: Template re-enrolment letters are available on the TPR website – visit www.tpr.gov.uk/reenrol-letter

Step four: Complete your re-declaration of compliance

You are required to complete your re-declaration of compliance with TPR to let them know that you’ve met your legal duties. This should be done within five months of the third anniversary of your staging date. You should do this even if you have not re-enrolled any staff into the pension scheme.

Tip: Make sure TPR has your current contact details as it will write to you about your re-enrolment duties.

Further guidance on re-enrolment is available on the TPR website: http://www.thepensionsregulator.gov.uk. Alternatively, if you would like to speak to our Payroll Team, please contact us.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

The Rising Tide of Auto Enrolment

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Over the course of the next two years Auto Enrolment Pension contribution rates are rising. These changes will affect you as an employer as well as your employees.

Currently the total minimum amount is 2% of qualifying earnings, of which the minimum for the employer to pay is 1%. This means that the employee normally also pays 1%.

From 5 April 2018, these rates will increase. The new total minimum will be 5%, with the minimum employer contribution rising to 2%. From 5 April 2019, they will rise again to 8% and 3% respectively.

Of course, both the employee and the employer can chose to pay more into the scheme should they wish. For instance, if an employer wishes to contribute to his employees’ pension the whole 2% currently prescribed, the employee would not need to add anything, as the minimum amount has been reached.

If you are staging soon, or have perhaps passed your staging date, and would like any help don’t leave it too late! Our dedicated payroll team will be happy to help ease the burden.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Preparing for Auto Enrolment Seminar – 13 April 2016

We are delighted to announce that Stephen Rowntree from The Pension Regulator will be presenting at our Auto Enrolment seminar on Wednesday 13th April.

You may be aware from seeing ‘Workie’ the striking physical embodiment of the workplace pension on your TV screens, that the law on workplace pensions has changed. Every employer with at least one member of staff now has new duties, including enrolling those who are eligible into a workplace pension scheme and contributing towards it.

Why should you attend?

All UK employers must enrol their workforce in a workplace pension scheme by their ‘staging date’. It is important that you start to prepare now for Auto-Enrolment so that you can control costs and minimise disruption to your business. Not only that, but we are lucky enough to have Adam Tudor from Now Pensions presenting and he will also be available for a Q and A session at the end of the event!

Eventbrite - Preparing for Auto Enrolment Seminar

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Pension Auto Enrolment Top Tips

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Thousands of British Businesses are starting Automatic Enrolment in the coming 12 months here are our Top Tips for success:

  1. Don’t ignore the issue – it won’t go away! Also you cannot try to encourage employees to choose not to enrol, it may come back to haunt you.
  2. Make sure that the Pension Regulator has all the correct contact information for yourself and whoever processes your payroll.
  3. Find out your Staging Date, as there are daily fines for missing it.
  4. Assess your workforce to see who is eligible based on their age and earnings. Don’t discount self-employed, contractors or agency workers, check whether you need to consider them also.
  5. Communication is an essential part of Auto Enrolment. It’s not only about advising the employee of their responsibilities, but also recognising you may need to rely on this as evidence if an employee pleads ignorance further down the line.
  6. Make sure that all contracts and policies include mention of Auto Enrolment and all of the procedures involved.
  7. Don’t panic! We have already successfully enrolled many of our clients, and are a phone call away for any advice or help. Automatic Enrolment isn’t going away – and neither are we.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

The Monster Of Auto Enrolment

workie

The government has introduced a new character to our television screens this month: Workie. The multi coloured monster is designed as the physical embodiment of workplace pensions and will be fronting a media campaign to remind businesses of their responsibilities.

Pensions Minister Baroness Altmann was personally involved in the character’s creation. While admitting is was a quirky campaign, it has a serious message. “We need everyone to know they are entitled to a workplace pension – and we need all employers to understand their legal responsibility to their staff, but also to feel more positive about engaging with workplace pensions,” she added.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Photograph: Department of Work and Pensions/PA

Auto Enrolment Toolkit

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The Pensions Regulator is due to release a toolkit to help users of HMRC Basic PAYE tools with their upcoming Auto Enrolment responsibilities. Currently there is no functionality within Basic PAYE tools to process Auto Enrolment, and the Pension Regulator has confirmed that it has no plans to either. Which leaves the roughly 200,000 users needing to look at other options for when they stage.

With this is mind, the Pensions Regulator is to release a basic toolkit to enable users to ensure they comply with the regulations. However, the tool lacks many options that employers may need to use, such as only processing contributions based on banded earnings. Some of the many disadvantages of this tool is that, due to its highly manual nature, the process will be time consuming with a possible lack of accuracy. The human error factor means there is an increased likelihood that mistakes will be made. These mistakes will take additional time to locate and correct.

While it is a good thing that the software is free, and doubtless that will pull many Basic PAYE tools users into using it, there are many other options out there to help aid compliance issues. Employers need to seriously consider their options and make sure that they have an adequate system in place to cope with the demands of Auto Enrolment. Or else the penalties can be quite high.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Image courtesy of dan at FreeDigitalPhotos.net

Finding A Lost Pension

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With all the recent publicity surrounding changes to the rules about Pensions and, of course, the arrival of Auto-enrolment, you may have been prompted to review your pension provision.  As a result, you may have discovered you have a “black hole” in your history, where you have lost touch with an occupational pension scheme of which you were a member.

It’s estimated that over £3billion worth of pension contributions are sitting unclaimed because people have lost track of schemes they have been members of in the past.  When one considers that the average person can have had around 11 different employments over a working life, and probably changed address several times, this is hardly surprising.   Many 35-year olds today have already had an average of 5 different employers – and probably have not kept a record of related pension contributions.  How many of us worry about retirement when we are young?

Tracking a lost pension can be daunting, but if you have any paperwork you should, in the first instance, contact the pension provider who should be able to determine your pension rights with them.  You need to establish how much your contributions are worth and what you are able to do with them. If you have no details, the employer who operated the scheme is your next port of call.

If, however, that employer is no longer in existence, or not contactable for some reason, the DWP operates a free Pension Tracing Service which might help you locate the scheme you are looking for.  All you need to do is complete an on-line questionnaire with simple details such as your NI number, your employer’s details, approximate dates of employment and your address at the time in question.  They hold a database of schemes and employers, and may be able to provide contact details to help you locate the provider in question.  Details of the Pension Tracking Service can be found here

Once you have a full pension history, you can make a decision about what to do with the various “pots” you have accumulated, to ensure you get the maximum benefit in your retirement.  You can also obtain an estimate of how much State Pension to which you will be entitled, based on your National Insurance Contributions over the years, which can also help in your retirement planning.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

20% Of Employers ‘Going It Alone’ For Auto Enrolment

The Pensions Regulator has published guidance to assist the 20 per cent of employers who are looking to ‘go it alone’ for Auto Enrolment.

Recent research suggests that up to 290,000 employers will not be seeking advice when choosing or setting up a pension scheme to comply with auto enrolment. While 10 per cent do not know how to choose a scheme, or think it will be very difficult.

The regulator will be updating the wealth of information that it currently has online in order to help make the process as straight forward as possible for employers with little or no experience. It can all be accessed here.

If you would like help with your Auto Enrolment, give us a call at Green & Co.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Auto-Enrolment – Are You Ready For It?

It has been hard to miss all the recent coverage about auto-enrolment for employers. The new law means that every employer must automatically enrol workers into a workplace pension scheme on their ‘staging date,’ if they:

  • are aged between 22 and State Pension age
  • earn more than £9,440 a year
  • work in the UK

To find out your staging date follow this link (you will need your PAYE reference number handy!). Generally speaking, for employers with less than 30 employees, or for new employers, your staging date will be between 1st November 2015 to 1st February 2018.

Although you might sigh with relief that your staging date is far off in the distance, it will still take a while to get prepared. By starting to plan now, employers can budget, mitigate the costs and cause as minimal disruption to the business as possible.

If you already have an existing pension scheme open, do not assume that the scheme will pass as a qualifying scheme. It must be reviewed to ensure that it meets certain criteria.

How much will I have to contribute?

You will have to pay a minimum employer contribution for everyone you automatically enrol and anyone who opts in. The minimum amount is to be phased in, starting at 1% and rising to 3% of the employee’s qualifying earnings.

Setting up a pension scheme

If you don’t have a pension scheme, or don’t want to use an existing scheme, you’ll need to find a provider that can offer an automatic enrolment scheme. You need to ensure the scheme meets certain legal requirements. You could speak to an independent financial adviser or employee benefit consultant about finding a provider.

There are a number of pension scheme providers including the National Employment Savings Trust (NEST) established by the Government. NEST has a public service obligation to accept all employers that apply to join it. The Association of British Insurers has a list of ABI members providing qualifying automatic enrolment schemes.

When you’ve chosen a provider, you’ll need to work with them to get your scheme up and running in plenty of time for your staging date.

Should you have any queries regarding auto-enrolment please contact Green & Co for further advice.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.