Auto Enrolment

Pensions Auto Enrolment - are you up to date?

With effect from 1 June 2015, small businesses employing fewer than 30 staff are bound by the requirements of the new Pensions Auto Enrolment Regime, obliging them to automatically enrol all eligible employees into a qualifying pension scheme and to make a minimum contribution into that scheme. Small employers will have different "staging dates" from when they have to comply, varying from 2015 to 2017 at the latest.

The Pensions Regulator recently warned that even those who employ a single care worker, such as a carer or nanny, must comply with the Auto Enrolment Regulations, with very few exceptions.

Under auto enrolment, eligible employees over the age of 22 and earning more than £10,000 per annum have the right to belong to a workplace pension scheme, unless they choose to opt out.

6 April 2015 saw an increase in some of the thresholds and limits for auto enrolment. While the earnings trigger remains at £10,000 for 2015/16, the lower limit of the qualifying earnings band has risen to £5,824 and the upper limit of the qualifying earnings band is now £42,385.

Over five million workers in larger companies are already in the scheme, and an estimated 3.8 million workers are expected to be enrolled by smaller employers between now and 2018. However, according to recent research, one in four small businesses remains unprepared. Business owners are being urged to ensure that they prepare for the new regulations, since employers who fail to comply could be liable to enforcement action and/or a penalty.

As an employer, help to make sure you are prepared by following this checklist:

  • Develop a plan - once you know your staging date, you can be prepared.
  • Assess your workforce - identify eligible jobholders working for you, we can help you do this and software is available to help.
  • Review your pension arrangements - do you have an existing scheme or do you need to set one up?
  • Communicate the changes - employers must write to all workers explaining what auto enrolment in a workplace pension means for them, again we can help you do this or you can use software to help.
  • Enrol your workforce - you have a six week window from your staging date in which to enrol your staff in a qualifying pension scheme.
  • Register with the Pensions Regulator - within five months of your staging date - and be sure to keep records.
  • Make employer contributions - from October 2018, these will be a minimum of 3%.
  • Make monthly assessment of for workforce and 3 year reviews of opt-outs - again we can help as part of outsourcing your payroll or you can use software to help implement.

For more information on Pension Auto-Enrolment, please visit the Pensions Regulator's website: www.thepensionsregulator.gov.uk.

For further help, please contact our Tax Director, Stephen Collier, on 0161 761 5231 or email theteam@horsfield-smith.co.uk.