What is auto enrolment?

The principles of auto enrolment is designed to meet this challenge. Basically all UK businesses who employ one or more workers have to put them into a workplace pension scheme. The largest companies were required to establish their compliant schemes from October 2012 with further staging dates (the final day when employers must have their scheme in place) being identified for all other employers. The pension scheme must satisfy certain criteria and it is estimated that, when the process of auto enrolment reaches its peak, there will be over 200,000 businesses trying to “stage” in the same quarter. The resources from the pensions industry available to help these businesses may not be able to meet the demands of employers and this capacity crunch should not be underestimated. It is essential that employers understand the all of the regulations and what they have to do to ensure they fulfill their responsibilities.

What do I need to do?

You, as an employer are required by law to implement the following by your staging date:

  • Assess eligibility of employees
  • Manage contributions
  • Register with the Pensions Regulator
  • Ensure that inducements to opt out are not offered
  • Ensure that existing schemes comply with all regulations
  • Provide regular updates and employee communications
  • Manage the initial enrolment process for all employees
  • Keep accurate records of all the above
  • Manage and update the opting in and out of employees

When will I have to do it?

The government has set up a number of “staging dates” which are the final dates for employers to have set up an appropriate auto enrolment scheme. The staging dates for employers with more than 250 employees has already passed and for others the dates are:-

  • Medium employers (50 to 249 workers) April 2014 to April 2015
  • Small employers ( 49 or less workers) June 2015 to August 2017
  • New employers will start automatically enrolling their workers fro May 2017 to February 2018

What happens if I do not comply with the regulations?

The auto enrolment process is controlled by the Pensions Regulator. For breaches of the regulations he will follow a three stage process.

Stage 1 Compliance/unpaid contributions notice. This notice provides details of the breach and requires the employer to put things right within a specific timescale. It may also include a requirement to pay contributions with interest added.

Stage 2 Fixed penalty notice – £400. This notice requires employers to put right the breach identified in the previously issued compliance notice. Employers will have at least four weeks from the date of the fixed penalty notice to put things right. Failure to comply by the specified date will result in the fixed penalty notice being applied.

Stage 3 Escalating penalty notice. If an employer fails to comply with Stages 1 1nd 2 notices he will face daily escalating penalties which will start to be calculated from the date specified in the fixed penalty notice and will depend on the size of the employer as follows:-

1 to 4 employees – daily rate £50
5 to 49 employees – daily rate £500
50 to 249 employees – daily rate £2500
250 to 499 employees – daily rate £5000
500 or more – daily rate £10000

Where can I find out more?

We provide a complete solution to all of an employers duties and responsibilities in both setting up a suitable scheme and covering the ongoing administrative routines that the employer has to set up to ensure he does not encroach the new regulations. For a detailed appraisal of the whole process either contact your financial adviser or accountant or, if you prefer, please contact us at info@corpad.co.uk.

We would be happy to provide you with details of every aspect of auto enrolment and, by using the master trust, we can provide the pension scheme. Joining the trust merely requires the employer to complete a short application form and also a deed of adherence to the trust itself. Both documents can be found in our document library.

Millions of people are not saving enough to have the income they are likely to want in retirement. Life expectancy in the UK is increasing and, at the same time, people are saving less into pensions. We need to address these challenges.”
Department for Work and Pensions