Auto enrolment

Automatic enrolment was introduced as a law by the Government from 2012 to help people to save more for retirement and encourage them to have a pension. This change affects every organisation with an employer PAYE scheme.

The law requires every employer to assess all employees and then automatically enrol any workers who are eligible into a qualifying workplace pension scheme. Both employees and employers will have to make minimum contributions to the scheme as set out by The Pensions Regulator.

The phase-in of auto enrolment began in October 2012 with all organisations required to be on board by February 2018. The phase-in is being managed by The Pensions Regulator, who provide organisations with an ‘auto enrolment duties start date’ that tells them on what date they are required to have a qualifying scheme in place. The duties start date will be determined according to the number of employees forming the business’s PAYE scheme at 1 April 2012.

Auto enrolment places significant responsibilities on employers, with penalties for those who fail to comply. It is advisable for businesses to find out as soon as possible when their duties start date is and allow at least 18 months prior to this date to plan for implementation.

Inevitably, auto enrolment will have a big impact across several departments within an organisation. Organisations currently processing their own payroll may wish to consider outsourcing to a dedicated payroll team which would significantly reduce administration time at the organisation.

For more information regarding all aspects likely to affect employers, please download our free guide to auto enrolment.

Auto enrolment: Frequently asked questions by employers

Our Employer’s Guide to auto enrolment explains how you can determine your auto enrolment duties start date and the significance of this date in relation to your duties as an employer.

The costs to your organisation will depend on the type and number of workers you have in your business. The term ‘workers’ includes all of your employees but can sometimes include other persons. Page 3 of the guide explains the different categories of workers.

Please contact us if you would like us to assist you in the initial planning work for auto enrolment. It is never too early to consider the cost implications of this change to your business in order to manage them effectively.

Your responsibility as an employer is to have an appropriate pension scheme in place. We have set out on page 5 of the guide details of three pension schemes which have been established to cater for the employer of a small or medium sized business. For advice on which scheme may be appropriate for your business you will need to consult an Independent Financial Adviser or pension consultant.  Our sister company, Castlegate Financial Management, may be able to assist you.

Ideally you should choose an appropriate pension scheme provider and apply to that scheme some months before your duties start date.

There are some communications that you, as an employer, must send to your workers. These need to be around the time of the duties start date but there are precise dates by which you must supply information to your workers. In addition you may also wish to consider other communications. Page 6 of our guide explains where information on the appropriate communications is available.

The enrolment of workers into a pension scheme and the payment of pension contributions to the scheme will require quite a lot of work.

Your workforce will need to be assessed to establish who needs to be enrolled and what the contributions should be. A payment schedule for the pension scheme provider will also need to be prepared.

Page 7 of our guide gives further information in this area.

Inevitably there are forms to complete and records to keep to comply with the requirements of auto enrolment. Page 8 of our guide gives some information as to the requirements.

As may also be expected, there are penalties for non-compliance.

If you would like to discuss outsourcing you payroll function to us in order for us to provide a comprehensive auto enrolment service, including completing your registration requirements and working with you to ensure you have the correct records, please do not hesitate to contact us.