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Automatic Enrolment – A Summary

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Automatic Enrolment – A Summary

 

When did Automatic Enrolment start?

Larger employers were the first ones to set up pension schemes in 2012. Since then, Automatic Enrolment has been phased in to medium and smaller employers. The Pensions Regulator (TPR) has written to all UK employers to confirm their ‘staging date’. The staging date is the date by which the pension scheme must be in place.

 

How many employees have been enrolled since 2012?

Since 2012, 6,648,000 employees have been enrolled from 234,589 employers (*). Between now (Sept 2016) and Feb 2018, a further 1,165,000 employers reach their Staging Dates (#).

 

How does Automatic Enrolment work?

Employers must set up a workplace pension scheme that is compliant with the new Automatic Enrolment rules. Employers must automatically enrol eligible workers into the scheme and make contributions on their behalf. Some employers may be exempt from setting up a scheme depending on the age and salaries of their workforce.

 

Do I have to enrol all my staff members?

No- there are 3 different categories of employee:

  • Eligible Job Holders – aged between 22 and the State Pension Age and earning over £10,000 per year gross. These workers will need to be AUTOMATICALLY enrolled and the employers have to make a contribution on their behalf.
  • Non-Eligible Job Holder – aged between 16 and 74 and earning between £5,824 and £10,000 gross per year. These workers have the ‘option’ to join the scheme and if they decide to join, the employer has to make a contribution on their behalf.
  • Entitled workers – aged between 16 and 74 and earning less than £5,824 per year. These workers have the right to join a scheme and if they decide to join, the employer does NOT have to make a contribution on their behalf.

 

Do all employers have to set up a scheme?

No, if none of your employees earn over £10,000 per annum, you are not required to set up a scheme. However, you must notify TPR that this is the case otherwise there could be penalties.  

 

What should you do if you have or have not received your staging date letter from TPR?

Automatic Enrolment applies to all employers in the UK and the requirements are mandatory. If you have not yet received your staging date letter form TPR, we can find it out for you if you provide us with your PAYE reference.

 

Do employees have to contribute in addition to employers?

There are set minimum contribution levels that must be paid to the workplace pension scheme. Employers must pay a certain amount and the employee will pay the difference. The actual amounts vary depending on the employers ‘definition of pensionable pay’. Choosing the wrong definition could cost your business £1,000s.

 

What happens if employers don’t comply with the new regulations or fail to meet their staging date?

Those who fail to comply with the new regulations could potentially face significant fines and / or court action.

 

IMPORTANT NOTE – TPR has used it’s powers over 15,000 times with £400 fines being issued over 3,000 times and 861 escalating daily penalties (between £50 and £10,000 per day, depending on the size of the company $).

 

Tait Walker offers an initial consultation at our cost, including reviewing any existing pension schemes and how your payroll set up will cope with Automatic Enrolment.

If you would like to discuss this further, please contact Tait Walker Wealth Management on 0191 285 0321 or email employeebenefits@taitwalker.co.uk.

 

( * TPR Declaration of Compliance monthly report from July 2012 to 31st August 2016)

(# TPR Staging Forecast)

($ TPR – Automatic Enrolment Use of powers June 2016)

Tait Walker Wealth Management is a trading style of Tait Walker Financial Services Ltd which is authorised and regulated by the Financial Conduct Authority.

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