ON-GOING EMPLOYER RESPONSIBILITIES FOR AUTOMATIC ENROLMENT
It is vital to be aware that employer’s duties do not end after their duties start date. Like it or lump it, Automatic enrolment is a continuing responsibility for employers.
TO AVOID PENALTIES EMPLOYERS MUST MEET THEIR DUTIES.
Employers can avoid penalties by understanding how they must meet their duties. Employers should be fully aware that they are responsible to:
(A) Keep records of your automatic enrolment activities (this includes the names and addresses of staff you have enrolled, records of when contributions were paid into a pension scheme, staff opt-in notices, pension scheme reference or registry numbers and information sent to the pension provider) for six years and opt-out notices for four years.
(B) Monitor the ages and earnings of your new and existing staff and check their automatic enrolment eligibility every month (our payroll software can help us do this for you) for existing and new staff. As staff become eligible they will need to be enrolled.
(C) Enrol staff and write to them to let them know how automatic enrolment applies to them as they become eligible.
(D) Pay contributions to their pension scheme
AE DUTIES PART OF A COMPANY’S STANDARD OPERATING PROCEDURES
In a nutshell responsibility for meeting workplace pension duties ultimately lies with the employer. Automatic enrolment duties do not just stop once employees have been enrolled. They must become part of a company’s standard operating procedures.
Employers must help their staff understand automatic enrolment and raise awareness through varying channels of communication. Messages such as why saving for retirement is important and the law surrounding workplace pensions. Providing details where staff can find out more about workplace pensions and their provider is key.
The Pensions Regulator (TPR) sends out letters and emails to employers to support them with their automatic enrolment duties. These letters form a series of communications which are sent during the automatic enrolment process, helping employers to understand their duties and guiding them through what to do next.
Employers must calculate and pay their own contributions to their pension scheme on behalf of their staff, as well as calculating, deducting and paying over their staff’s own contributions.
Employers will have agreed contribution rates and when to pay them with the pension scheme when they were setting it up. The amount they must pay must be at or above the minimum amount set in law.
You must monitor the ages of your staff and the amount you pay them (including new starters) to see if you need to put any of them into a pension scheme. You must put them into a pension scheme and write to them within six weeks from the day they meet the age and earnings criteria.
If you have any staff who are
- – aged between 22 up to state pension age*
- – and earn over £10,000 per year, or £833 per month or, £192 per week
you must put them into your pension scheme and you must both pay into it.
*If you are unsure what the state pension age is you can use the State Pension Calculator to find
If any of your staff, who can ask to join your scheme write to you asking to do so, you must put them into it within a month of receiving their request.
You will have to pay into the pension scheme if they are:
- – aged 16-74
- – and earn at least £520 a month or £120 per week.
To find out how much you will need to pay you should ask your pension scheme provider.
Any of your staff can choose to leave your pension scheme after being put into one.
If they do ask to leave within one month of being put into a scheme, this is known as opting out. Many pension providers will manage the opt out process on your behalf, speak to your provider if you’re unsure. If any of your staff opt out, you need to stop taking money out of their pay and arrange a full refund of what has been paid to date. This must happen within one month of their request.
MoneyHelper have produced a guide for staff who are thinking of leaving their pension scheme.
You must keep records of how you’ve met your legal duties, including:
- – the names and addresses of those you’ve put into a pension scheme
- – records that show when money was paid into the pension scheme
- – any requests to join or leave your pension scheme
- – your pension scheme reference or registry number
You must keep these records for six years except for requests to leave the pension scheme which must be kept for four years.
Once you have set up a pension scheme and put your eligible staff into it, your legal duties don’t end there.
You must continue to make the payments that are due into the scheme every time you run payroll. TPR monitor the contributions that are paid into workplace pensions and can tell if payments that are due are not being made into your staff’s automatic enrolment scheme. TPR will take action if you fail to comply with your ongoing legal duties, and you may need to backdate any missed payments.
Every three years you’ll need to put staff back into your pension scheme if they have left it, and if they meet the criteria to be put into a pension scheme. This is known as re-enrolment. TPR will write to you in advance of your re-enrolment date to explain more.
It is vital to be aware that employer’s duties do not end after their duties start date.
Like it or lump it, Automatic enrolment is a continuing responsibility for employers and it is essential to incorporate employer duties into a company’s standard operating procedures.
Our payroll team and the software we use can help employers in all of these duties.
If you would like to know more please get in touch with our payroll team via thefollowing email addresses: