PENSIONS INSIGHT
AE and ongoing duties
The Pensions Regulator outlines employers’ duties as compliance spotchecks begin E very employer has automatic enrolment (AE) duties. They need to: assess their staff; put them into staff and enrol eligible staff, process any requests to join or leave the scheme, and keep and maintain accurate records. They’ll also need to re-enrol eligible staff into an AE pension scheme every three years. Let’s take these in turn:
being received. Employers will have to pay into the pension scheme unless they are aged 16–74 and earn less than £490 a month or £113 per week. If any staff choose to leave the pension scheme within one month of being put into it, employers 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. ● Records – Staff records need to be kept up-to-date, including who’s been enrolled and when, information about the pension scheme, and the contributions being paid. These records must be kept for six years, except for requests to leave the pension scheme which must be kept for four years. ● Re-enrolment – Every three years, all staff who either opted out of their workplace pension scheme or have ceased to become members need to be re-assessed and re-enrolled if they meet certain criteria. Employers will need to write to them to tell them what they’ve done – and then they’ll need to re-declare their compliance to TPR. n
a workplace pension scheme if they meet certain criteria; write to them to tell them what they’ve done; and complete and submit a declaration of compliance with The Pensions Regulator (TPR). To date, more than eight million people have been automatically enrolled in a workplace pension by more than 600,000 employers. And with hundreds of thousands more employers due to reach their duties start date by February 2018, the number of people automatically enrolled will continue to rise. However, an employer’s workplace pension duties do not stop with declaring compliance. And with TPR conducting spot checks on employers across the country to make sure they are complying with their duties, it’s important you are aware what employers need to do on a regular and ongoing basis to ensure compliance with the law. Recent research published by TPR shows most employers did not have any difficulty with ongoing duties. The analysis shows that AE is ‘business as usual’ for employers, and that it’s easier than they thought it would be. Most micro employers said they spend around half an hour each month meeting their duties and two thirds did not use outside help. Those who did use external help said it cost them around £42 per month to use an accountant or auditor. Employers need to pay regular contributions into their chosen pension, monitor the age and earnings of their
● Pay regular contributions into the pension – Employers need to calculate and pay the employer contributions to their staff’s pension scheme on an ongoing basis. In addition, they’ll need to calculate staff contributions, make the necessary deductions from payroll and transfer their contributions to the pension scheme. They’ll have agreed what these rates are and when to pay them with their chosen pension scheme. By law, employers (and their staff) have to make minimum contributions into the scheme, and should be aware that these minimum contribution levels are due to increase in April 2018 and April 2019 (see table). ● Monitor the age and earnings of all staff – Employers will need to monitor any changes in age and earnings of their staff to identify if they become eligible for AE. They’ll also need to check eligibility of any new members of staff on the day they start work. Should staff members become eligible (for example, by turning age 22, or by meeting the earnings thresholds), then they’ll need to be put into a pension scheme and contributions paid to it. Payroll software should be able to support clients with this. ● Requests to join or leave – If any staff write to their employer asking to join their workplace pension scheme, they must be put into it within a month of the request
Useful links Business advisers: http://bit.ly/2uFl068 Employers: http://bit.ly/2siipOM
Employer minimum contribution
Date effective
Staff contribution
Total minimum contribution
Current until 5 April 2018 6 April 2018 – 5 April 2019
1% 2%
1% 3%
2% 2%
6 April 2019 onwards
3%
5%
8%
| Professional in Payroll, Pensions and Reward | September 2017 | Issue 33 50
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