Under the Pensions Act 2008, every employer in the UK, regardless of industry, must put certain staff into a pension scheme and contribute towards it, this is called ‘automatic enrolment’. To comply with their legal duties, employers need to understand what to do and by when, this will depend on their circumstances and those of their staff.
To qualify for auto enrolment, employees must be:
- classed as a worker
- aged between 22 and state pension age
- earn at least £10,000 per year
- usually (‘ordinarily’) work in the UK
The latest auto enrolment contribution rates
| Date effective | Employer minimum contribution | Staff contribution | Total minimum contribution |
|---|---|---|---|
| Currently until 5 April 2019 | 2% | 3% | 5% |
| 6 April 2019 onwards | 3% | 5% | 8% |
Auto enrolment – what do employers need to do and by when?
If you are an employer, with at least one employee you think qualifies for auto-enrolment, or you are thinking of employing someone soon – we recommend you start by answering the questions in the Duties Checker
To do this you will need to have your:
- Staging Date
- Accounts Office Ref
- PAYE Ref Code
You should have received this information from HMRC but if you need further help locating them, please get in touch.
If the duties checker reveals you have at least one employee who qualifies for auto enrolment, you need to do the following:
- Choose a pension scheme that can be used for automatic enrolment and put your staff into it. Do this as soon as possible as it may take time.
- Work out who you need to put into a pension scheme on your duties start date.
- Write to each member of staff individually to tell them how automatic enrolment applies to them (templates are available from the pensions regulator). Do this within 6 weeks after your duties start date.
- Complete your declaration of compliance to tell the pensions regulator that you’ve met your automatic enrolment duties. Do this within five months of the start of your legal duties otherwise you could be fined.
Automatic Enrolment for Directors
If you are a director with no other staff working for you, the company does not have automatic enrolment duties providing you do not have an employment contract in place with your company.
Ongoing employer duties
- Ensure pension contributions are paid and stay up to date of the next contribution increase.
- Keep track of new starters and monitor the age and earnings of all your staff, to see if they need to be put into a pension scheme and how much you need to pay in.
- Process any requests to join or leave the pension scheme.
- Keep and maintain accurate records.
- You will also need to re-enrol eligible staff into your automatic enrolment pension scheme every three years.
Further help
Pillow May has a great guide for employees that you may wish to circulate to your staff – you can download our guide here.
Or if you wish Pillow May to handle your company’s auto enrolment going forward, please get in touch with Ruth Phelps our Personal Tax and Payroll Manager.
