Automatic enrolment carries with it a set of administrative requirements which may cause challenges for smaller businesses which are new to pensions. With this in mind, it may be a wise investment to enlist the services of an auto enrolment specialist, which can analyse your existing infrastructure (both IT and human) and advise what steps need to be taken to bring it into compliance. Some suppliers can offer IT packages, which essentially connect your company to their systems to carry out the relevant tasks. While these can be an effective solution, they need to be looked at carefully so that you fully understand what you’re getting in terms of functionality and also so that you are aware of any IT work needed to pair the systems.
Looking at payroll and HR
There are essentially two aspects to managing auto enrolment. One is understanding the situation of each employee (i.e. monitoring who is eligible, who is not eligible and who is entitled) and the other is carrying out the necessary processes to ensure that employees are enrolled as required and that contributions are made appropriately. These functions tend to lie within the domain of HR and /or payroll; however you may need to clarify who is responsible for what (for example who takes ownership of answering staff questions), either or both departments may need further training in this area. You may also need to look at how these departments communicate with each other both in terms of IT and in terms of staff-co-operation to ensure that all relevant data is sent where it needs to go.
An overview of practical requirements
You will, obviously, need to choose at least one qualifying pension scheme and you will need to check your terms and conditions of employment to ensure that they reflect the new legislation. For eligible workers, you will need to ensure that:
- they are auto enrolled as they become eligible
- they receive appropriate communication
- contributions are made
- opt-outs are processed
- records of the auto enrolment process are kept in line with regulatory requirements
Employers (along with trustees and providers) are required to keep records to demonstrate that they have complied with the requirements of the workplace savings legislation. These are a combination of records about the employees (e.g. who is eligible, who is not eligible and who is entitled) and records relating to the scheme itself. These records need to be kept for 6 years and can be kept either electronically or on paper.
You will also need to decide whether or not to use postponement and if so how.
For non-eligible workers you must inform them of their right to be enrolled in a workplace pension scheme. If they choose to be enrolled then the requirements are as for eligible workers. For entitled workers you need to provide information about saving for a pension and if the employee chooses to become a member of one ensure the employee’s contribution is deducted from their pay and sent to the provider. You will need to have monitoring systems in place to ensure that employees are identified as they become eligible and that a re-enrolment exercise is conducted approximately every three years.
Summary of what you have to do
The table below summarises the key activities that are necessary to satisfy the rules for workplace pension saving.
|Eligible Jobholders||• Provide information about the pension saving rules
• Automatically enrol the individual into a pension scheme
• Make on-going contributions
• Process any opt-out notices
• If the employee chooses to leave active scheme membership, automatically re-enrol them approximately every three years
• Keep records of the automatic enrolment process
|Non-eligible Jobholders||• Provide information about the pension saving rules
• If the individual asks to join, arrange pension scheme membership
• Make on-going contributions
• Process opt outs
• Keep records
|Entitled Workers||• Provide information about the pension saving rules.
• If the individual asks to join, arrange pension scheme membership, deduct employee contributions and pay these to the employee's pension scheme.
As a final point, you must remember to inform the Pensions Regulator of your compliance with the relevant legislation and reconfirm this each time you conduct a re-enrolment exercise.