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What you Need to Know about Auto Enrolment Requirements

Whenever a new business regulation comes in, there's a lot of confusion and uncertainty. So, to make it a bit easier, here's what you need to know about auto enrolment requirements.

You will learn

  • What auto enrolment is
  • What your responsibilities are as an employer
  • What could happen if you don't comply with the new law

All employers have automatic enrolment requirements, and you should make sure you are ready for your staging date, which is when you will need to put any staff you have that qualify in to a pension scheme. This applies to all employers – even if you have just one member of staff. If you need some more guidance about what to pay your staff, you can find it here. 

The duties checker

Use The Pensions Regulator’s (TPR) duties checker to find out exactly what your duties are, what you will need to do, and by when. 

Your staging date 

Your staging date is the time that you need to have complied with the new laws by. You can find out when your staging date is by imputing your PAYE reference number.

Your declaration of compliance 

Whether or not you have workers who must be put into a pension, you need to complete a Declaration of Compliance and submit it to The Pensions Regulator (TPR) to let them know you have met your duties. 

The Declaration of Compliance shows TPR what you have done to meet your duties and must be completed within five months of your staging date – if you do not do this on time, you may incur a fine.

Which staff qualify? 

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

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

Qualifying earnings include wages, salary, fluctuating elements of pay, bonuses, and some statutory payments such as maternity and sick pay. Not all pay elements fit neatly inside these headings, and a good rule of thumb is that if earnings are subject to National Insurance contributions, then they are likely to also qualify as earnings for automatic enrolment. Payroll software should help with this, and also where earnings fluctuate on a week-by-week or month-on-month basis.

Nobody to put into a pension scheme?
If you have no one to put in to a pension scheme, you can bring your staging date forward to any date and declare your compliance at the same time.

Completing your declaration early means you can get this task out of the way and do not need to think about it anymore.

Complete TPR’s online duties checker to find out more about bringing your staging date forward.

Missed your staging date? 

The Pensions Regulator know that most employers will want to do the right thing for their staff and will work with you to enable you to comply with the legislation if you have not understood your duties or have been unable to comply. However, those who do not comply by their deadline risk a fine – the regulator will use their powers where necessary to ensure compliance. 

If you are late complying or think you might be, you should tell The Pensions Regulator about it straight away. 

To find out more, visit The Pensions Regulator’s web page: What happens if I don’t comply?

Re-enrolment: Declare your compliance at the same time that you re-enrol your staff.

Every three years you must put certain members of staff back in to an automatic enrolment pension scheme. This is called re-enrolment. 

If you have chosen your re-enrolment date, then put a note in your diary to complete your re-declaration of compliance at the same time and tick both off your list in one fell swoop. Find out more information here. 

If you are late complying with your duties

TPR’s approach is to educate and enable and enforce where necessary. They get in touch with you to make you aware of your duties and to help you understand what you need to do to comply with the law. As the employer, it is your responsibility to meet the new employment laws.

If you have not understood your duties or have been unable to meet them, the regulator will provide support to enable you to comply. However, if you have chosen to ignore your duties, they may use their enforcement powers.

If you are late complying or think you might be, you should tell TPR about it straight away.

You should aim to put all staff back in the position they would have been in if you had complied on time.

For example, if you did not put a member of staff in to a pension scheme on your staging date when you should have done, you will need to:

  • Put them into a pension scheme and treat your staging date as their automatic enrolment date.
  • Backdate contributions so that your member of staff does not lose out.
  • Give your staff member the option to pay their own backdated contributions - they can choose whether or not they want to do this.

What are The Pensions Regulator’s enforcement options?

Informal action: Guidance and instruction can be issued by telephone, email, letter and in person. Warning letters may also be sent confirming a set time frame for compliance with the duties. 

If you receive a warning letter, call the phone number on your letter or email to find out what you need to do to meet your legal duties.

Statutory notice: A statutory notice will tell you to comply with your duties and/or pay any contributions you have missed or are late in paying. 

Penalty notice: A fixed penalty notice may be issued if you do not comply with statutory notices. This is fixed at £400 and payable within a specific period. 

An escalating penalty notice can be issued for failure to comply with a statutory notice. This penalty has a prescribed rate of £50 to £10,000 per day depending on the number of staff you have. 

A civil penalty can be issued for cases where you fail to pay contributions that are due. This is a financial penalty of up to £5,000 for individuals and up to £50,000 for organisations. 

TPR will recover all penalty fines issued, and will take the case to the courts if the problem escalates. 

What to do if you have received a penalty notice 

If you have received a penalty notice, you can pay it using TPR’s secure online payment service. You should have your penalty notice reference handy (shown on the front of the notice). Failure to pay the penalty can result in The Pensions Regulator bringing formal legal proceedings to recover the penalty.

You can pay your fine using the online payment service here.

Are you compliant with the new pension laws?

Complying with auto enrolment doesn't have to be hard, our free guide tells you exactly what you need to do

Written by:

Beth Ellin

How's Business content writer

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