15 July 2016

Pensions: Auto-enrolment - Are you ready?

Workplace pension reform is beginning to apply to employers with less than 50 employees. Laura Clark, employment law specialist and solicitor, takes a look at what the employer's duties are.

Workplace pension reform is beginning to apply to employers with less than 50 employees. Failure to comply with new employer duties could mean stringent penalties, so preparation is essential.

What are the employer’s duties?

An employer must automatically enrol any “eligible jobholders” into a pension scheme that meets a quality criteria and pay a minimum level of contributions. An eligible jobholder may opt out of the scheme however, after three years they will be automatically re-enrolled.

When do they come into effect?

Every employer has an allocated “staging date” from when the new duties will apply.

You can find out your staging date by inputting your PAYE reference number into the tool on the Pensions Regulator’s website. Employers without a PAYE scheme have a staging date of 1 April 2017.

How to prepare





Nominate contact

Write to the Pensions Regulator to do this. The contact will be kept up to date with the preparatory tasks and deadlines.

6 months before staging

Choose pension scheme

The pension scheme must be suitable for automatic enrolment and low paid employees. There are several options and you may get helpful advice from an accountant /financial advisor.

On your staging

Work out which employees should be enrolled

Whether an employee is “eligible” depends on their age and earnings. For farmers and growers, working hours/pay of staff will vary dependent on the season and so assessments should be made with every payroll.

If you have temporary/short-term staff who will be working with you for less than three months, subject to certain requirements you may postpone assessing them. This means that you will not be required to enrol them/contribute unless they expressly request this. At the end of the postponement period, these staff should be assessed as normal.

Within 6 weeks of staging

Write to staff You must explain how auto-enrolment applies to them (the Pensions Regulator’s website contains some helpful templates).

Within 5 months of staging date

Declare compliance You must make an accurate and timely declaration of legal compliance to the Pensions Regulator or you may be fined.

After staging date

Comply with ongoing duties Each time you pay your staff you need to monitor their age and earnings to ensure that qualifying employees are enrolled. Requests to join or leave the scheme should be dealt with within one month. You should also review your employment contracts to ensure they contain the necessary pensions information.

Although the process may seem daunting, the Pensions Regulator’s website contains really helpful guidance and should you need further support, please do contact me or a member of our employment law team.

Related news

Back to top