Auto-enrolment and my clients

Talk to your clients and see whether they are aware of the obligations that auto-enrolment may place on them. If they are not familiar with their duties you can direct them towards this short leaflet from the Pensions Regulator.

http://www.thepensionsregulator.gov.uk/docs/resource-emp-duties-and-safeguards.pdf

If your client already has a pension scheme then they will need to check that is compliant with the new regulations. You can use the following tool to determine whether a pre-existing scheme complies with the new regulations.

http://www.thepensionsregulator.gov.uk/employers/dc-qualifying-scheme-tool.aspx

Once your client understands their duties you can start doing what all ICB bookkeepers do and help your client run their business effectively.

Find Out your Clients Staging Date

All employers in the UK have been allocated a ‘Staging date’. This is the time from which the new duties will apply to your client.

Your clients staging date is based on the number of persons in their largest PAYE scheme as at 1 April 2012.

In order to find out your clients staging date simply enter their PAYE reference into the tool below.

Nominate a Point of Contact

The Pensions Regulator will send regular emails at key stages in your planning process to help you stay on track. Making sure that either you as the bookkeeper or someone responsible within your clients firm are nominated will ensure the information that the regulator sends gets to the right person. Note that responsibility for complying with the duties remains with the employing organisation, not the nominated contact.

If your staging date is less than 12 months away, you should have received a letter from the Pensions regulator about your automatic enrolment duties. You'll need the code from this letter to nominate your contact online - it only takes five minutes to fill in the form. If you haven't had the letter, or if you've lost your letter code, please email customersupport@autoenrol.tpr.gov.uk

Tip: Nominating a contact does not mean you have registered.

Once you have found out your clients staging date you will need to start devising a plan to implement an auto enrolment pension scheme. This process will involve liaising with both your client and external advisors in order to successfully manage the transition.

Assessing the Workforce

One of the first things that you or your client will need to do is assess the businesses work force. Workers who will need to be automatically enrolled into a pension scheme are known as ‘eligible jobholders’. An eligible jobholder is anyone who fulfils the following criteria:

• Aged between 22 and state pension age
• Working or ordinarily working in the UK
• Earning  more than £9,440

Workers who fulfil the following criteria must be given an option to opt in to the auto-enrolment scheme:

• Aged 16-74
• Earning over £5,688 but under £9,440

Workers who fulfil the following criteria must be given the option to join the scheme but do not need to go through the auto enrolment process:

• Aged 16-74
• Earning under £5,688

For further information please consult the employer responsibilities section of the Pensions Regulator website

http://www.thepensionsregulator.gov.uk/employers/tools/employer-duties.aspx

Review the Software You Use

A crucial step in preparing for Auto-Enrolment is making sure that the software you use is capable of implementing the scheme. 

Automatic enrolment functionality

The functionality needed to help you assess whether your staff should be automatically enrolled may already be built into the payroll software you use. Or the person who does your payroll for you may already have appropriate software.

You should check with your software or payroll provider to see if your current systems will work out who you have to automatically enrol.

Questions to ask software providers

You need to find out if your software can identify whether you have staff that you will need to automatically enrol. If you don’t have access to the necessary software, you will need to get it. When speaking to your existing software provider or selecting new software, you should ask whether the system:

• assesses your workforce
• allows the use of postponement
• calculates pension contributions
• handles opt-in and joining
• handles opt outs and refunds
• supports you in generating and issuing letters to your staff
• keeps records and provide reports
• interoperates with some or all pension scheme provider systems.

If you are selecting new software you should ensure that it is compatible with your existing systems.

Information to put into your software

Having got the right software in place, you’ll need to know how to use it before you get to your staging date. This means understanding:

• what information you need to put in
• how to configure it
• what outputs the software will give and how.

You’ll need to test your software ahead of your staging date to ensure you understand how it works. And to check that you know where to find all the information you’ll need.

Maintaining up-to-date records

It is crucial that you hold accurate information about your staff, their personal and address information and the contributions that have been made on their behalf.

Inaccurate records or missing data can have serious consequences, which can include staff being automatically enrolled at the wrong time, information about automatic enrolment not getting to the staff member, and the wrong amount being paid to your staff at retirement. It is your responsibility to ensure that records are correct and up-to-date.

Reviewing Existing Pension Arrangements

This is the key part of the process that cannot be performed by a Bookkeeper. The business owner themselves need to find qualifying Auto Enrolement pension scheme that will fit their circumstances. It is strongly advisable that independent financial advice is sought due to the complexity of the pensions market.

Raising Awareness amongst the Workforce

It is a great idea for your clients to engage with their workforce about auto enrolment. As well as generally discussing the topic there is an obligation to write to each employee within one month of the businesses staging date stating how the new scheme will affect them. Template letters can be generated using this tool on the Pensions Regulator website.

http://www.thepensionsregulator.gov.uk/employers/letter-templates-for-employers.aspx

On your clients stage staging date, or on the last day of the postponement period, they'll need to assess the ages and earnings of each member of staff. This is to identify the duty you have for them, for example whether you need to automatically enrol them.

By this stage, you should have the necessary systems in place to generate this information automatically.

At registration, you'll need to account for everyone who worked for you on your staging date. You’ll need to tell us how many people were automatically enrolled, how many were already in an existing pension scheme you provide, and what you did for anyone else in your employment. You’ll still need to complete registration even if you didn’t have to automatically enrol any of your staff.

Enrolling Eligible Jobholders

Now you know who you need to automatically enrol, you'll need to provide the scheme with whatever information they need to get their membership up and running. Eligible Jobholders should have already have been identified what this is when the scheme itself was being set up.

If your client has postponed automatic enrolment from staging, they'll need to assess the ages and earnings of each member of staff on the last day of the postponement period, to see who's eligible for automatic enrolment. They'll have one month from the end of the postponement period to automatically enrol any staff who are eligible.

If you haven't postponed, you need to assess the ages and earnings of all staff on your staging date. You need to automatically enrol anyone who's eligible within one month.

Registration

Registration is the legal requirement to submit information to the regulator about how you're complied with your employer duties. If your client does not provide the information required they may face enforcement action and incur a fine.

Their registration deadline is five calendar months from their staging date. For example, if their staging date is 1 November 2014, they must submit your registration to the Pensions Regulator no later than 31 March 2015.

A video explaining the registration process can be found here

https://registration.livegroup.co.uk/EventWebsites/registration/downloads/capita/

Keeping Records 

Certain records must be kept about members  staff and about the pension scheme. Some of these will be kept by the pension scheme, some must be kept by the employer. These include:

• names and addresses of staff you've automatically enrolled
• the contributions payable to the pension scheme and when they were paid
• any opt-in or opt-out notices you receive
• name and address of the pension scheme
• employer pension scheme reference or pension scheme registry number.

Make sure you know what these records are and where to get them from. Your client will also need to decide how you'll store them so that they can easily access them. They'll need to be able to produce these records if the Pensions Regulator ever asks to see them. Keeping records is good governance and is proof that your client carried out their duties.

These records must be kept for a specified time, which in most cases is six years.

Paying contributions

You'll need to deduct and pay regular contributions into your staff members' pensions.

Processing opt outs

Staff you've automatically enrolled have a right to opt out if they decide they don't want to be in your pension scheme. They have a month from being enrolled during which they can opt out and receive a full refund of any contributions they've made.

You must process any opt-out requests promptly, including issuing any refunds.

See Opting out for more information.

Processing opt-in requests

Some staff who weren't automatically enrolled can choose to opt into, or ask to join your pension scheme. You must process these requests straight away and enrol them into a pension scheme.

See Opting in and joining for more information.

You'll need to pay regular contributions to the pensions of staff who opt in.

Monitoring ages and earnings

Your business software (or pension provider) should be set up to monitor the ages and earnings of each member of staff and alert you if any of their rights change, eg by turning 22, or their earnings changing, as your duties in relation to them will change. This age and earnings check must happen every time you run payroll.

Their earnings are important - if a member of staff is earning under £9,440 and has an increase in salary over this amount, you'll need to automatically enrol them.

Assessing new starters

When anyone new starts working for you, you'll need to check whether they're eligible for automatic enrolment. If they are, you'll need to enrol them into your pension scheme following the same process as you did at staging or after postponement.