Auto-enrolment staging dates for employers with fewer than 50 employees started on 1 June 2015.
Whilst Alcumus are not qualified to give advice in relation to pensions, we do feel it is helpful to remind clients of their responsibilities so that you can start to take steps to ensure you comply with your legal obligations.
Please note that the staging dates for automatic pension enrolment started on 1 June 2015 for employers with fewer than 50 employees. The overall staging period for this group runs until 1 April 2017. If your business falls into this group, you need to be aware of the legal requirement on you to automatically enrol eligible workers in a pension scheme and pay minimum contributions for these workers.
A jobholder can only opt out of the pension scheme once he/she has been auto-enrolled, but if the employee does not do so the employer will be obliged to pay minimum pension contributions as long as the worker remains an active member. An employee cannot tell you beforehand that they do not want to be enrolled and you should not encourage them not to enrol.
Here is a summary of the steps to take in preparation for pension auto-enrolment:
- Staging date. Confirm your staging date, having regard to the number of workers in your PAYE scheme.
- Workforce. Assess your workforce to determine which categories of individuals count as “workers” and which of these qualify as eligible jobholders, non-eligible jobholders and entitled workers.
- Pension scheme. Review your existing pension scheme (if you have one) and decide whether all jobholders will be enrolled in the same scheme or whether more than one scheme will be used. Seek some independent advice on this and start to locate a pension provider. Don’t leave this too late as some pension providers are declining to take on the business of smaller employers because the administrative burden is too great. In this case you may be able to rely on the default scheme provided by the Government known as NEST (National Employment Savings Trust). If an existing scheme is to be used for some or all jobholders, review whether it counts as a qualifying scheme and an automatic enrolment scheme under the legislation and consider whether any rule amendments are required. If an existing defined benefit (DB) scheme is to be used for existing jobholders, decide whether to take advantage of the five-year transitional period.
- Postponement. Decide whether to use a postponement period and, if so, which categories of jobholder it should apply to.
- Notices. Prepare standard-form documents, including opt-out and opt-in member notices, standard auto-enrolment, opt-in and joining information notices and postponement period notices if appropriate.
- Contracts of employment. Review standard contracts of employment and decide whether to contractually enrol new jobholders into a pension scheme or include wording about auto-enrolment. Consider whether contractual data protection provisions need updating. This is where your HR Consultant will be happy to help you.
- Payroll. Set up auto-enrolment payroll processes. These should include arrangements for paying employer contributions for each jobholder (if a defined benefit arrangement is being used), deduction of contributions from jobholders’ earnings and paying refunds for those who opt out.
- High earners. Consider the position of high earners who may have registered for enhanced or fixed protection from the lifetime allowance charge or who have started taking flexible drawdown. They must opt out within one month to retain protection.
- Recruitment. Ensure appropriate staff are aware of prohibited recruitment conduct and prohibitions on inducements to opt out i.e. you can’t entice or try to persuade an employee not to enter the scheme.
- Records. Ensure proper record-keeping procedures are put in place.
- Registration. Register with the Pensions Regulator within four months of your staging date.
For further information in respect of your obligations and how to provide a suitable pension arrangement, please contact a Pension Adviser in good time.
If you have any questions in relation to amending your contracts of employment these should be directed to the HR Consultancy team who can be contacted on 01484 439930.