What is it?
Auto-Enrolment is the process of enrolling people into a workplace pension. The government introduced new legislation in 2012, where all employers must automatically enrol their staff into a workplace pension. It was phased in by the government, with large employers required to set up schemes first. By 2018 all employers will be required to have a workplace pension set up.
Auto-Enrolment was introduced by the government because it had become clear that the UK workforce was not saving enough to fund their retirement.
Employees can opt out of the scheme, but every 3 years they will be re-enrolled back into the pension. Both the employer and the employee must pay contributions. Contributions by both the employer and the employee can be phased over time. This is to minimise the financial impact to businesses and employees.
Workplace Pensions are regulated by The Pensions Regulator.
Phased contributions default option
| Dates | Employer contributions as % of salary | Employee contributions as % of salary | Total contributions as % of salary |
| 1st April 2019 onwards | 3 | 5 | 8 |
This table shows the most commonly adopted approach, however there are 3 other models that an employer can choose from depending upon the definition of salary. We can guide you as to which model is best for your business.
Who needs it?
Every employer in the UK needs to have a workplace pension. Whether you are a large employer or a family employing a nanny, if you have one or more employees, you must offer a workplace pension to them. If you fail to follow this legislation you will be fined by The Pensions Regulator (TPR).
What you need to do
- Identify your organisation’s staging date. This is the date by which time your organisation must have a workplace pension set up
- Decide which pension provider you are going to use
- Select a traditional contract-based scheme or a multi-employer trust
- Set up a pension scheme
- Calculate pension contributions
- Enrol employees into the pension scheme
- Send out statutory communications
- Complete the declaration of compliance with The Pensions Regulator
- Increase contributions in line with the Regulator’s requirements as above (see table)
- All employees must be re-enrolled back into the scheme every 3 years
- Complete a re-declaration to state you have re-enrolled employees
- It is also imperative to keep informed about pension regulations as this is constantly changing
Whether you want a quality workplace pension for your employees or to simply comply with legislation in the cheapest manner, we can guide you through the available Auto-Enrolment options. Contact us today for an informal chat.
