What is Pension Automatic Enrolment?
New pension legislation requiring all companies to automatically enrol workers into a qualifying pension and pay employer contributions of a minimum level.
What are my employer duties?
There are many but as an employer you must comply with the new regulations by initially assessing and segmenting all of your staff into one of three categories and communicating with them all.
How often do I assess the eligibility of my staff?
This would normally be every pay reference period, so it could be weekly but is likely to be monthly. You may be able to defer this assessment for three months but only in certain circumstances.
What is Auto Enrolment ‘Middleware’?
This may be available through your pension or payroll provider. It will assist you in assessing your staff and complying with the new legislation. There may be an additional cost for its use.
What is the National Employment Savings Trust (NEST)?
NEST is a brand new workplace pension scheme. Any UK employer can use NEST to meet their new workplace pension duties, no matter how large or small their organisation.
What is my Employer Staging Date?
Your staging date is the date by which you must have finished all of your preparations and be ready to comply with the new auto enrolment regulations.
Will I have to store data and keep records?
You will have to store sensitive employee data for a period of at least 6 years in a secure manner and be able to call on this should the regulator ask questions about your processes.
Which members of staff are included?
The Auto Enrolment legislation affects all workers who work or ordinarily work in the UK. This will include full time, part time and temporary workers for whom you issue a contract of employment. You will need to segment staff so that you can identify your ‘eligible’, ‘non-eligible’ and ‘entitled’ workers.
When do I need to refund employees contributions?
If an eligible employee opts-out of your pension scheme within the “opt-out window” your pension providers will notify you and you must refund the employees contributions taken so far.
What is the “opt-out window”?
This is the period of time that an eligible employee has to opt-out of the pension arrangement and receive a refund of any contributions taken, normally 30 days after enrolment.
Do I need to notify The Pension Regulator whether I intend to use ‘Phasing’?
No, you do not need to inform the Pension Regulator (TPR) that you intend to use Phasing. TPR are simply concerned that you meet the minimum pension contributions. For example, if you use Qualifying Earnings as the basis to calculate Pension Contributions:-
- October 2012 to September 2017 – Total contribution 2% where employer must pay at least 1%
- October 2017 to September 2018 – Total contribution 5% where employer must pay at least 2%
- October 2018 onwards – Total contribution 8% where employer must pay at least 3%
If we have an employee who has two jobs with us and they are members of an existing pension scheme through one, do I enrol them for their second job, if eligible, or are we already covered as they have a pension?
The answer is, you will need to assess each role. Where an employee is a member of a pension scheme as a result of one job, if they have a second job with the same employer then this second employment must be assessed for auto enrolment purposes. Doctor’s might be examples of this, as if they work for a hospital trust and are members of the NHS scheme but also have private practice income through the hospital, they may require enrolment into another pension scheme for their private practice employment. (NB In this example we assumed that this second income is not in respect of a self employed capacity).
If we have an employee who has dual income but is below the salary eligibility criteria for auto enrolment for one of their roles do I need to enrol them based on both incomes?
If the individual has dual income with one employer then each role must be assessed individually and enrolled appropriately according to their respective categories, Eligible, Non Eligible and Entitled Workers. An example might be a doctor who’s NHS earnings make him/her eligible, but if the employed private practice earnings with the same hospital/employer are low then he/she could be categorised as non eligible in respect of this employment.
If some of our employees who are members of our existing pension scheme that we have decided will not be open to all eligible employees, will we need to enrol these employees into the new scheme as well as the existing one?
If this current scheme could be made qualifying then there is no need. At the time of your staging date you will need to write to those members affected to explain why they are not being enrolled into your new scheme.
An example of this could be the NHS pension scheme, where healthcare employers have access to the NHS scheme for certain employees but not all employees. When their staging date arrives the employer will need a Qualifying Workplace Pension Scheme (QWPS) to comply with the legislation, but would not need to enrol those employees who are eligible for the NHS scheme into the new QWPS as the NHS scheme would be a qualifying scheme, in this example, if it were open to all.