Auto-enrolment and my employees

The first thing to do is nominate a point of contact.  The pensions regulator will send you essential information and alerts throughout the automatic enrolment process.  To make sure this information gets to the right person, you can confirm your details or nominate a contact at:  www.tpr.gov.uk/autoenrol-nominate

Know your staging date and develop a plan

The date from which the new law applies to your company is called your ‘staging date’.  Your staging date is based on the number of persons in your largest PAYE scheme as of 1 April 2012.

This is based on the HMRC information held by the regulator on that date.  If you had fewer than 50 workers on 1 April 2012, but you had or were part of  a PAYE scheme that has more than 50  people in it, your staging date may be  earlier than it would have been, if it  were based on the number of people you have within your PAYE scheme.  You can therefore, if you wish, move your staging date to a later prescribed date.  See the staging date timeline for more information:  www.tpr.gov.uk/staging

All employers are able to bring forward their staging date.  If you intend to do this, you must notify the Pension’s Regulator in writing.  Understanding when these duties affect you is important.  There may be multiple staging dates for groups of businesses or just one.  Use the Pensions Regulator's interactive tools to check your staging date at:  www.tpr.gov.uk/employers/tools

Assess your workforce

Workers who will need to be automatically enrolled into a pension scheme are known as ‘eligible jobholders’.  An eligible jobholder is:

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

You will need to assess who in your workforce is an eligible jobholder.  You must automatically enrol eligible jobholders into an automatic enrolment scheme, which also has to meet certain minimum qualifying criteria.  You will need to make contributions towards it.  Workers who are not eligible jobholders still have a right to opt in to a pension scheme or a right to join one.

* The earnings trigger is expected to increase each tax year. 

Review your current pension arrangements

If you have an existing pension scheme, you will need to check if it meets the criteria to qualify as an automatic enrolment scheme.  If it does, you may wish to consider enrolling all eligible jobholders into it.  If your scheme does not currently qualify, you may be able to change the scheme rules or amend the terms of the policy to make it an automatic enrolment scheme, which also has to meet certain minimum qualifying criteria.

If you do not have a pension scheme that is suitable for automatic enrolment you will need to find one.  If you have a defined contribution (DC) scheme, you can use this online tool to help you determine whether your existing DC scheme meets the minimum criteria for an automatic enrolment scheme as set out in legislation.

Choosing a qualifying pension scheme

If you need to select a qualifying pension scheme, you can choose from a number of pension providers including the National Employment Savings Trust (NEST), which has a public service obligation to accept all employers that apply to join it.

To be a qualifying scheme, minimum contributions must be made or it must provide a minimum rate at which benefits will build up.  A scheme suitable for automatic enrolment must also not:

• Impose barriers to joining the scheme, such as probationary periods or age limits for members
• Require staff to make an active choice to join or take other action prior to joining
• Require the worker to provide extra information to stay in the scheme

Choosing a scheme with good outcomes

It is important to make sure the pension scheme you choose is able to deliver good outcomes for your workers’ retirement savings.  An independent financial advisor can offer advice on pension schemes that are right for your company. 

Communicate the changes to all your workers

Employers must inform all their workers in writing about the pension changes and how it affects them personally. This includes all your workers (except those aged under 16, or 75 or over), which can include fixed-term contract workers.

You can download letter templates here to use to write to your workers.  Many of the templates tailor information to help workers understand what the changes specifically mean for them.  This, in turn, could minimise their questions to you.

The duty is on the employer to provide the right information to the right individual, at the right time.

Letter Templates 

There is a process that employers need to follow to make an eligible jobholder an active member of an automatic enrolment pension scheme.  Certain information about your eligible jobholders will need to be supplied to pension scheme managers at specific points in the process.

Complete registration with The Pensions Regulator and keep records

You are required to inform the Pensions Regulator how you have fulfilled your new automatic enrolment duties by registering this information with them shortly after your staging date.

You can comeplete registration online at www.tpr.gov.uk/autoenrol

You will need to maintain specified records about your qualifying scheme and the workers enrolled into it, including:

• The workers’ earnings
• Contributions paid
• Opt-out records for eligible jobholders.

You will need to monitor the age and earnings of all workers who are not eligible jobholders and not already in a qualifying scheme on an ongoing basis. If any worker’s circumstances change in a pay period so that they become an eligible jobholder, they will need to be automatically enrolled.