The law on workplace pensions has changed. By September 2017 all businesses must operate a pension scheme for qualifying employees to which both with employee and employer can contribute. Eligible employees will automatically be enrolled into a workplace pension scheme by their employer. This will be normal procedure and no employer is exempt. If eligible employees don’t want to be in the pension scheme, they must choose to opt out.
Employees who don’t meet the criteria below are still able to opt into the pension scheme if they wish, but will not be enrolled automatically.
Workers eligible to be auto enrolled:
- Are at least 22 years old;
- Have not reached state pension age
- Earn more than a minimum amount a year (currently £10,000)
- Work in the UK
What does it mean for employers?
The first thing you should know is when your Auto-Enrolment duties come into force. This is called your ‘staging date’. By this date you must have set up a pension scheme, enrolled all eligible workers and undertaken all the correct communication with employees. You will be written to by the Pensions Regulators 12 months prior to this and reminded again 9 months later.
You will need to:
- Set up a pension scheme or amend an existing one to ensure it complies with the new regulations.
- Make any necessary changes to payroll to meet the new requirements.
- Put systems in place to monitor the ages and earnings of your staff.
- Communicate with your workforce to explain how the reforms affect them, even if they’re not eligible for automatic enrolment.
- Budget for higher payroll costs if you don’t already have a scheme.
Qualifying Earnings and Contributions:
Banded Earnings Method (also known as Qualifying Earnings Basis), the minimum contribution requirement is based on a band of earnings, currently between £5,772 and £41,865 gross per annum. The figures below indicate the contributions you will have to make on qualifying earnings.
Minimum Employer Contribution
Minimum Total Contribution
October 2017 to September 2018
In addition to the Banded Earnings Method there are also other pension schemes which qualify, Pensionable Pay and Earnings Basis, each of which has different contribution levels.
We will be able to:
- Confirm your staging date.
- Review any current pension scheme and test it against the new requirements
- Provide a recommendation to a new Auto- Enrolment scheme.
- Identify who will be affected within your workforce and who should be auto enrolled.
- Communicate with your staff about how this will affect them.
- Plan for your staging date and work with you to implement any relevant changes.
- Provide a payroll service ready for Auto-Enrolment.
- Advise on reducing the potential costs of auto-enrolment through salary sacrifice schemes such as employee benefits.
- Project manage the whole process for you.
Auto-Enrolment means a considerable change for employers. Planning early is key so you are prepared and ready by your staging date.
If you have any queries or would like help with auto enrolment, please do not hesitate to contact Paula Sanderson by calling the office on 0151 649 3900 or emailing firstname.lastname@example.org.
For advice regarding pension schemes please ask for Ray Bucknell or email email@example.com.