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30 January 2017

Automatic enrolment:Work out who you need to put into a pension scheme

All employers who have at least one worker will haveautomatic enrolment duties. You'll need to assess your staff, put those whomeet certain criteria into a pension scheme (and make contributions to it),tell them what you've done, and complete a declaration of compliance.

‘Assessing your staff' is a key step to take to comply withyour automatic enrolment duties. Quite simply it means considering the age andearnings of the people you employ and identifying who needs to be automaticallyenrolled and who doesn't.

Formal assessment ofstaff

Not every member of staff needs to be automaticallyenrolled. It depends on their age and earnings those who earn above £192 aweek (or £833 in a month) and who are 22 or over (but under state pension age)must be put into a pension scheme.

If you employ staff whose hours vary (e.g. zero hourscontract), pay fluctuates, are seasonal or are on short-term/temporarycontracts the legal duties will still apply to you.

If any of your staff fall outside of the above age andearning criteria then you only need to put them into a pension scheme if theyask.

NB: If you've worked out that you don't have staff to put into a pension scheme, it's important to know that you still have other tasks to carry out in order to meet your legal duties you will still have to write to individual staff members to tell them how automatic enrolment applies to them. The Pensions Regulator has templates on their website that will help you with this.

The Pensions Regulator has a tool on their website to helpwith your assessment www.tpr.gov.uk/ae-checker.


Which earnings qualify for automatic enrolment?

Qualifying earnings include wages, salary, fluctuatingelements of pay, bonuses, and some statutory payments, such as maternity andsick pay. We recognise that not all pay elements fit neatly inside theseheadings, and a good rule of thumb is that if earnings are subject to NationalInsurance contributions, then they are likely to also qualify as earnings forautomatic enrolment. Payroll software should help with this, and also whereearnings fluctuate on a week-by-week or month-on-month basis.

Many payroll providers already provide a module or an add-onfor automatic enrolment that will do this earnings number-crunching for you, aswell as calculating the correct contributions, and helping with your ongoingduties. Look at your payroll software to find out how it can help you withautomatic enrolment.

What do I need to doonce I've assessed my staff?

Having worked out what you need to do for each person youemploy, the next step is to then put those that you need to into a pensionscheme and to write to each person individually.

Unless you want to use an existing pension scheme forautomatic enrolment, you'll need to find a scheme yourself or get help fromyour accountant or a financial adviser. The Pensions Regulator has informationthat can help you with this www.tpr.gov.uk/employers

Once you've chosen which pension scheme you want to use,you'll need to give your pension scheme provider information including staffname, address, date of birth and earnings, so that they can set up your staffin the pension scheme.

Each time you pay your staff you will need to calculate howmuch you (and they) need to contribute in and arrange for this to happen.Payroll software may help do this for you.

Popular questions

One of my staff has a second jobwith a different employer; do I have to take this into account when assessingthem?
You only need to consider staff who are employed by you. Their earningsfrom another employer do not form part of your assessment.

If a member of staff's earningsare less than or equal to £192 a week, must they be put into a pension scheme?
If your member of staff's earnings are less than or equal to £192 a week(£833 a month) you do not have to put them into a pension scheme that you payinto, unless they ask to join the scheme. However, you will still have otherduties which include writing to all staff individually and completing yourdeclaration of compliance. Use The Pensions Regulator's Duties Checker tounderstand the specific duties you have.

I'm the only director of my owncompany - do automatic enrolment duties apply to me?
If you are the sole director and you have no otherstaff working for you, the company does not have automatic enrolmentduties. If you have received a letter from The Pensions Regulator but you donot have automatic enrolment duties, then you will need to tell themthat you're not an employer. Failure to alter them to yourcircumstances may trigger compliance action go to www.tpr.gov.uk/ae-checker now.

What if my business only hasdirectors?
You won't have any automatic enrolment duties if any of the followingapply:

  • you are the sole director
  • you are all directors, none of you has anemployment contract
  • you are all directors, only one of you has anemployment contract

Automatic enrolment will apply if more than one director hasa contract of employment. In this case, if your client does have automaticenrolment duties for a director, and the director meets the age and earningscriteria above, your client is not required to automatically enrol themunless your client chooses to do so.

More information on assessing your stafffor automatic enrolment can be found on www.tpr.gov.uk/ae-checker

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