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Auto Enrolment

The Government introduced auto-enrolment to help more people save for their future.

The Government introduced auto-enrolment to help more people save for their future. This means that employers must automatically enrol some workers into a workplace pension plan and give other workers the option to join.

We want to help you understand and prepare for the changes you’ll have to make. This guide tells you more about auto-enrolment, your duties as an Employer, and what they mean for you. Because we’ve based it on our current understanding of the relevant legislation and regulations, it may be subject to change.

AUTO-ENROLMENT AT A GLANCE

The employer duties started being introduced in stages from October 2012. The date your employer duties first apply is known as your staging date and is based on the number of people in your largest Pay As You Earn (PAYE) scheme on 1 April 2012.

What is the effect on my Workforce?

You’ll need to assess your workforce to determine whether they’re treated as a worker. There are three different categories of worker; which category workers fall into depends on their age and earnings.

What are my employer duties?

Your employer duties will depend on the types of worker you employ. You’ll need to automatically enrol
some workers into a pension scheme and arrange membership for others. You’re also responsible for the ongoing maintenance of the scheme and have an obligation to keep certain records.

What is the effect on pension schemes?

You must register that you have an auto-enrolment scheme in place with The Pensions Regulator (TPR) no later than five months after your staging date. You’ll also have to re-register every three years. If you have an
existing pension scheme, you can use this to meet your employer duties if it meets certain criteria.

What happens if I do nothing?

Your employer duties are not optional, and it is the role of TPR to ensure you comply. Although TPR’s approach will be to educate and encourage compliance, you’ll face substantial fines or even imprisonment if you don’t comply.

What is NEST?

The National Employment Savings Trust (NEST) is a pension scheme aimed primarily at lower earners and small employers that don’t have access to a company pension scheme.

Identifying your staging date

The Pensions Regulator will tell you at least twelve months in advance when your staging date is, and send you a reminder three months before your staging date.

Bringing forward your staging date

You can choose to bring your staging date forward to coincide with other key company dates such as your end-of-year accounting. Your choice of date must be within a list of allowable dates. You’ll have to contact TPR in writing to confirm the new staging date you’ve chosen. You must also agree the date with your pension provider. You should do this at least one calendar month before your new chosen staging date.

How we can help

By working with you and understanding your workforce, we can create a bespoke approach for your company and help you meet your duties as an employer, now and in the future.

ASSESSING YOUR WORKFORCE

You’ll need to assess your workforce to determine whether they’re treated as a worker. This can also include contractors and agency workers.

The different types of worker

There are three different categories of worker, which category they fall into depends on their age and earnings. You must automatically enrol eligible jobholders into an auto-enrolment scheme. Non-eligible jobholders have the right to opt in to an auto-enrolment scheme. Entitled workers have the right to join a pension scheme.

THERE ARE
THREE DIFFERENT
CATEGORIES OF
WORKER, WHICH
CATEGORY THEY
FALL INTO DEPENDS
ON THEIR AGE AND
EARNINGS.

WHAT IS THE EFFECT ON PENSION SCHEMES?

Certification

As an alternative to using the qualifying earnings definition, you can choose to use certification. This
enables you to use a definition of pensionable earnings that suits you.

A certificate can cover all workers or groups of workers. For example, you can use one certification basis for
one group of workers and a different certification basis for other workers. The contribution levels for certification
can be phased in and there are three certification options available, as shown in the table below

Certifying in advance

You can certify for up to 18 months in advance. You must re-certify at least every 18 months, or sooner
if there is a significant change such as: changes to the scheme contribution level or a company takeover or merger. A certificate can cover all workers or groups of workers.

PENALTIES

The Pensions Regulator (TPR) will impose penalties if you don’t comply with your employer duties, for example, failing to automatically enrol eligible jobholders, or failing to refund contributions to those who have opted out. Similarly, you can’t encourage jobholders to opt-out of the pension scheme or encourage candidates to do so during the recruitment process. The types of penalties include:

Non-statutory action

TPR can issue guidance and instruction by telephone, email, letter and in person. Or TPR can send a warning letter confirming a set time frame for compliance with the duties.

Statutory notices

TPR can issue guidance and instruction by telephone, email, letter and in person. Or TPR can send a warning Statutory notices can direct you to comply with your duties and/or pay any contributions you have missed or are late in paying. TPR have further discretionary powers which allow them to estimate and charge interest on unpaid contributions and direct you to calculate and/or pay unpaid contributions.

Penalty notices

TPR can issue penalty notices to punish persistent and deliberate non-compliance.

A fixed penalty notice will be issued if you don’t comply with statutory notices, or if there’s sufficient evidence of a breach of the law. This is fixed at £400 and payable within a specific period.

TPR can also issue an escalating penalty notice if you fail to comply with a statutory notice. This penalty has a prescribed daily rate of £50 to £10,000 depending on how many employees you have.

TPR can issue a civil penalty if you fail to pay contributions that are due. This is a financial penalty of up to £5,000 for individuals and up to £50,000 for organisations.

If you fail to comply with a compliance notice, or there is evidence of a breach, TPR can issue a prohibited recruitment conduct penalty notice. This penalty has a prescribed rate of £1,000 to £5,000 depending on how many employees you have. TPR aims to recover fully all penalties that it issues.

Court action

TPR can take civil action through the court to recover penalties.

Employers who deliberately and wilfully fail to comply with their duties may be prosecuted.

TPR can also confiscate goods where there is a criminal conviction and restrain assets during criminal investigations.

Appealing against a penalty

You have a right to appeal against any penalties imposed by TPR and must do so in writing within 28 days of issue of the notice.

You can find out more about auto-enrolment and the role of TPR on its website at www.thepensionsregulator.gov.uk

THE PENSIONS REGULATOR CAN ISSUE GUIDANCE AND INSTRUCTION BY TELEPHONE, EMAIL, LETTER OR IN PERSON

HERE TO HELP YOU

By working closely with you and understanding your workforce and your needs we can help you:

  • Deliver a communications plan for your workforce
  • Assess your workforce and estimate costs for you as the employer
  • Assess and report on your payroll system and offer solutions for the complex administration exercises necessary to comply with auto-enrolment
  • Select the right pension scheme for you and your workers
  • Arrange employee presentations to enable your workforce to understand what will happen and when
  • Arrange for a face-to-face appointment with employees and give individual advice

Managing your finances effectively can be a confusing business. The financial world is complex, and making the right decisions for your future can seem a daunting prospect.

We take pride in offering a personal service that considers your individual circumstances. Your financial situation is unique, so we work hard to understand your goals and aspirations, and make financial recommendations based on a comprehensive and detailed analysis of your needs.

THROUGH OUR COMPREHENSIVE OFFER, WE WILL HAVE AN ADVISER WHO IS ABLE TO HELP YOU WITH YOUR FINANCIAL PLANNING NEEDS:

  • Saving and investing for the future
  • Planning for your retirement
  • Estate and trust planning
  • Protection against risk.

When it comes to auto-enrolment, many employers have already benefited from dealing with a qualified and authorised adviser, to help them meet their legal obligations in this complex area.

We look forward to helping you

Auto Enrolment Download
Disclaimers:

The FCA do not regulate auto enrolment.

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