Auto enrolment step by step guide

Auto enrolment Guide

Employers should now be well aware of the recent legislative changes that require employers to automatically enrol qualifying staff into a workplace pension scheme. A huge number of small UK businesses will have to factor this into their short-term plans and ensure that they meet the appropriate deadline for stepping into line with auto enrolment. In order to help things run smoothly here is a list of the top ten tips for auto enrolment.

1.   Follow the written instructions

To help ensure there are no nasty surprises, The Pensions Regulator (TPR) will be writing to all employers well in advance of their business’ staging date. The staging date they provide in this letter will be the date that employers become legally responsible for ensuring their staff are enrolled correctly. If things remain unclear or you are unsure what to do, visit the The Pensions Regulator website or contact Alexander Marshall – we’ll be happy to clarify any concerns.

2.   Know your staff

Different criteria applies to different staff when it comes to auto enrolment, so it’s important to double-check the personal details of your workforce. There are 3 categories; eligible jobholders, non-eligible jobholders and entitled workers.  Remember workers over state retirement age (SRA) will also need to be assessed.

  • eligible jobholders - You must auto enrol staff aged between twenty-two years and state pension age who earn in excess of £192 per week or £833 per month. Employers are obliged to contribute to the pensions of staff in this category.
  • non-eligible jobholders -  Employees classed as non-eligible jobholders can opt to join the workplace pension scheme and the employer must make contributions to this pension fund.
  • There are two categories of non-eligible jobholders :-

    1. aged between 16 & 74 and has earnings between the lower earning threshold and the earning trigger for auto enrolment, for 2016/17 between £486 and £833 per month.
    2. aged between 16 and 21 or between state retirement age 74 and has earnings above the earnings threshold, for 2016/17 £833 per month.
  • entitled workers -  Staff aged between 16-74 and earning below £5,824 per year can ask to be enrolled in a pension scheme but the employer is not obliged to make contributions to their pension fund.

3.   Act now

The hectic nature of business means the temptation to procrastinate is always there; however, the financial penalties for failing to meet your obligations when it comes to auto enrolment mean staying ahead of the game is essential. It is recommended that you start to prepare no later than six months ahead of your staging date to make sure things run smoothly. Failure to adhere to the auto enrolment regulations will lead to an initial fine of £400 followed by daily penalties of anything between £50 and £1,000 and you may be required to make up both the employer and employee contributions that should have been paid from your staging date.

4.   Plan for the future

Auto enrolment will inevitably impact on your budgeting. With set-up charges and regular contributions to account for, now is a good time to think ahead and consider the implications of pay rises and staffing numbers. 

5.   Clarify your status

If you happen to be contacted by The Pensions Regulator but do not actually have any staff working for you, it remains your responsibility to clarify your status. This can be done online at - https://automation.thepensionsregulator.gov.uk/notanemployer

6.   Communicate the changes

Employers are legally obliged to communicate details of auto enrolment to all staff between the age of sixteen and seventy-four. This does not only apply to staff eligible for auto enrolment but also to those who may wish to voluntarily join your pension scheme. Not only is this a legal requirement, it will also reassure staff and make sure they are well aware of these important changes.

7.   Staff registration

All eligible staff must be registered so The Pensions Regulator can monitor the effectiveness of the new regime. In theory this will help protect employees and support employers as the changes are rolled out. Registration must be completed within four months of your staging date.

8.   Why wait?

If your business is well prepared and you want to get the ball rolling quickly, it is possible to bring your staging date forward in order to begin participating sooner. To do this, The Pensions Regulator will need at least one month notice prior to your proposed new staging date. Your pension scheme must also be set up and aware that you plan on starting early.

9.   Last minute questions?

Now is the time to double check that all the boxes have been ticked and that you have met your obligations. With punitive financial penalties awaiting those who have not complied, we would always recommend getting a second opinion if you have any niggling doubts. At Alexander Marshall, we are well versed in assisting with auto enrolment and the challenges it can bring, so contact us if you’d like us to help make sure that you are prepared and ready to go.

10.    All set

Now everything’s finalised and you, your staff and The Pensions Regulator all know where things stand, all that’s left to do is to ensure your payroll software and process are capable of dealing with auto enrolment.

If this is managed in-house, it’s worth looking into additional training for your payroll staff to ensure that they understand the auto enrolment process.

If your payroll is outsourced, be sure to liaise with your provider to clarify their role in ensuring that you are complying with auto enrolment. They should be well aware of what auto enrolment entails and help to ensure everything runs smoothly.

Managed Service Provided by Alexander Marshall

Alexander Marshall can offer a managed service and help you to meet your obligations under Auto Enrolment Regulations where we provide you with a payroll service. 

Where we do not provide a payroll service we can offer further guidance to help you to meet your obligations under Auto Enrolment Regulations. For more details please ask about Alexander Marshall’s Solutions to Auto Enrolment leaflet. 

Alexander Marshall – we’ll be happy to clarify any concerns.