1. Q: What is auto enrolment and who does it affect?
Put simply, auto enrolment is new legislation that requires business owners to automatically enrol all eligible employees into a qualifying workplace pension scheme and pay contributions. Any business that employs at least one person is affected by auto enrolment.
2. Q: When is my staging date?
Every company’s staging date is different. The first companies required to register for auto-enrolment began the process in 2012, but your staging date could be as late as 2017. Help Me Auto Enrol can help you identify your staging date easily – all we need is the PAYE reference number for your business.
3. Q: So all I need to do is make sure my employees are auto-enrolled by the staging date?
No – once registration is complete you have an ongoing responsibility to ensure any changes affecting your employees’ auto-enrolment rights are handled. This includes new starters, leavers, opt-ins, opt-outs and employees changing the category they are in.
4. Q: What does auto enrolment mean for me and my business?
As an employer you’ll have significant legal duties and responsibilities, both in the lead up to your staging date and beyond, with administering a pension scheme and ensuring it complies with the legislation. Your ongoing responsibilities include: making correct contributions, keeping records up to date, managing opt-ins and opt-outs, notifying staff of any changes and issuing regular communications. It’s a big undertaking for any business, and Help Me Auto Enrol are on hand to simplify the process – giving you time to concentrate on what you do best: building your business.
5. Q: What are my duties and responsibilities as an employer?
You must provide a Qualifying Workplace Pension Scheme and auto enrol eligible employees in it. The scheme must be registered with the Pension Regulator by your staging date, and you must keep records of all actions taken and documents issued, including any changes to your workforce. You will also need to pay pension contributions for your employees. Help Me Auto Enrol can help with the burden of this process, ensuring your scheme fully complies with regulations.
6. Q: What is a Qualifying Workplace Pension Scheme?
A Qualifying Workplace Pension Scheme is one which meets the regulations of the Pensions Act 2008. Your scheme must meet the automatic enrolment criteria, the qualifying criteria and the minimum requirements. The minimum requirements differ depending on whether your scheme is a Defined Contribution or Defined Benefit scheme.
7. Q: Which employees are affected by auto enrolment?
Auto enrolment affects all employees: eligible workers are those aged between 22 and state retirement age who earn a minimum of £10,000 per year.
There are two types of non-eligible workers: those aged 16 to 75 who earn less than £10,000 per year and those aged either 16 – 22 who earn a minimum of £10,000 per year.
Entitled workers are aged 16 – 75 and earn less than £5,824. They’re eligible to join a pension scheme, but their employer doesn’t need to make contributions because their qualifying earnings are below the earnings threshold for auto enrolment.
8. Q: What are qualifying earnings?
Qualifying earnings are the pay range that makes a worker eligible to receive employer contributions to their pension. For the tax year 2016/17 this will be between £5824 and £43,000. These amounts can change and are set by the Department for Work and Pensions each new tax year.
9. Q: What contributions do I need to make?
The level of contributions an employer and a staff member needs to make will be phased in slowIy.
From October 2012: 2% of qualified earnings must be paid into a workplace pension and employers must pay 1%
From April 2018: 5% of qualified earnings must be paid into a workplace pension and employers must pay 2%
From April 2019: 8% of qualified earnings must be paid into a workplace pension and employers must pay 3%
You can pay higher contributions if you wish, and decide on your own contribution structure. Remember, pension contributions are tax deductible and increased contributions can help you to attract and retain the best candidates when recruiting.
10. Q: What records do I need to keep?
Ahead of your staging date, make sure your staff records are accurate and up to date. You’ll need to provide accurate details about each of your workers to your pension provider to guarantee them active membership of the pension scheme. As an ongoing process, some of your duties include: keeping records of the names and addresses of enrolled employees, records of when contributions were made, details of opt-in and opt-out requests, the reference or registry number of your pension scheme, and copies of any information you send to your pension provider.
These records must be kept for 6 years. Opt-out notices should be kept for 4 years.
11. Q: What are the benefits of providing a workplace pension scheme for my staff?
Providing a workplace pension scheme is a legal obligation. Staff value an employer who helps them save towards their retirement – it creates a greater sense of loyalty and security, and can help you attract and retain good quality employees.
12. Q: What happens if staff don’t want to join the pension scheme?
Auto enrolment means staff must join your pension scheme. An employee has a one-month period after automatic enrolment during which they can decide to opt out. Employers can’t opt their staff out of the scheme, but they must provide them with the information they need to opt out.
13. Q: Can I encourage staff not to join the scheme?
No – it’s illegal to encourage employees to leave a workplace pension scheme. You can tell them they’ll no longer benefit from employer contributions to their pension if they leave the scheme and inform them that they usually receive tax relief on the contributions they make to the scheme themselves.
14. Q: How will auto enrolment affect my payroll system?
Using payroll software can help to simplify the way you assess your staff and provide details about them to your pension provider. The software you use must work with your chosen pension scheme and be able to carry out the auto enrolment tasks you need to remain compliant. Help Me Auto Enrol offers a cost effective Payroll & AE software solution to help you take the hassle out of coordinating these systems and guarantee ongoing compliance.
15. Q: What happens if I’m not in compliance with the pension regulations?
If you fail to set up a workplace pension scheme or fail to properly administrate a scheme and keep your records updated, you risk penalties from the pension regulator. These include a warning or compliance notice, fixed penalty notices of £400 and escalating penalty notices with a maximum rate of £10,000 per day.
16. Q: Are the contributions I have to pay taken before or after tax deductions are made?
Pension contributions are taken from an employee’s gross earnings, before tax is assessed or deducted. They receive the full tax credit for any payment made and the total is credited to the balance of their pension.
17. Q: Are employer and staff contributions refunded if employees choose to opt out of the pension scheme?
If scheme members decide to opt out within the time period stated by the regulations any contributions paid into the trustee account will be returned to their employer. It’s then up to the employer to reimburse any contributions made by the staff member via their payroll system. The employee must be refunded as soon as possible, irrespective of whether the employer has received the reimbursement from the trustee account.
18. Q: Can employers claim corporation tax relief on their contributions?
Yes – your contributions to staff pensions are an allowable business expense.