pensions & auto-enrolment 41


Clarity on employer auto-enrolment


duties for interns Maria Riccio, head of the pensions team at Penningtons Manches LLP, outlines the scope of employer auto- enrolment obligations when recruiting interns


UK requirements for the compulsory provision of workplace pensions for qualifying employees came into force in June 2012. The aim is to encourage more people to save for a comfortable living in retirement.


All UK employers will eventually have to ‘auto-enrol’ their workers into a qualifying pension scheme where they meet the 'age and earnings' criteria set out under the regulations. These requirements apply on a staggered basis, depending on the size of the employer’s workforce as at April 1, 2012. Employers with less than 50 staff and new employers formed after April 1, 2012 will not have yet had


to comply with the new pension requirements.


The employer duties apply to 'workers' rather than those who are genuinely self-employed. To establish 'worker' status, there must be a mutuality of obligations (one party provides work and the other party carries it out) and the worker must provide a personal service (so there is no option to send in a substitute).


Many employers currently offer student placements, which are also called 'internships' and it is not uncommon for such placements to last up to a year in length. Interns would qualify as workers, as they are personal appointments.


Six steps to auto-enrolment


As you may be aware auto-enrolment deadlines are fast approaching and all businesses must meet the new regulations and requirements set by the HM Revenue & Customs (HMRC)


Over the next three years over 800,000 employees will stage. Therefore, whenever your staging date may be, it’s a good idea to start thinking about how you will put the requirements into place.


Figures from The Pensions Regulator show that 367 fixed penalty fines had been issued by the end of March 2015, in which 198 were in the first quarter of 2015. With this in mind businesses need to make sure they have everything in place to meet the HMRC requirements. You will need to:


• Have a suitable pension scheme in place


• Be automatically enrolling all eligible employees


• Be paying an employer contribution into the employee’s pension account.


Although this isn’t something you can implement overnight, you can make the auto-enrolment process easier by considering the following tips:


Keep your data up to date


Data will play a key role in the implementation and communication of auto-enrolment and will need to be up to date. Employee and payroll data should be assessed, corrected, formatted and tested in order to make sure it is ready for the auto-enrolment.


Get HR and payroll working together


Auto-enrolment can add extra days to the payroll run and processes need to be able to cope. The HR and payroll teams will need to work effectively together to allow this to run smoothly.


THE BUSINESS MAGAZINE – THAMES VALLEY – JULY/AUGUST 2015


Employers will struggle to sidestep the auto-enrolment requirements by dressing up internships as consultancy services. Interns are junior and there to learn the ropes rather than provide genuine consultancy services based on specialist skills and experience.


There is no special exemption for interns under the regulations and provided the person meets the age and earnings criteria, auto-enrolment will apply. Even where interns do not meet the criteria for auto-enrolment, they may have rights to join an employer’s scheme triggering the payment of mandatory employer contributions.


Don’t underestimate the task


Don’t underestimate the time, effort and planning that is required to successfully implement auto- enrolment in your business.


Use a qualified and experienced adviser


The Pensions Regulator recommends that businesses appoint advisers who have already been through the process and have practical experience. Advisers, pension scheme providers and the Regulator itself provide a valuable support network for employers.


Your staging date is not the end


Auto-enrolment is ongoing. You need to assess your workforce every time you run the payroll, which is usually weekly or monthly. Employees will join, leave, change hours or earn bonuses on a regular basis, so ongoing assessments will require adequate resources and strong processes.


Work with your workforce


The objective of auto-enrolment is to help ensure individuals save to provide an income for their retirement. Employees will have


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Employers can postpone auto- enrolment compliance for three months after their 'staging date' and where a new employee starts work after their staging date. Employers may decide to structure their internships around these postponement periods to avoid having to comply with their auto- enrolment duties.


Some employers may prefer to stick to longer and more traditional internship periods. Many interns may decide to opt- out of auto-enrolment anyway, on the basis that they do not wish to earn pension benefits for such a short period of employment, especially where they feel a return to the employer for a permanent position (possibly after completion of their university course) is unlikely.


Details: Maria Riccio 01256-407100 maria.riccio@penningtons.co.uk www.penningtons.co.uk


different priorities, as some will be closer to retirement than others. A younger employee may see auto-enrolment as more wage reductions while others may be more enthusiastic to take on any adjustments.


Implementing an ongoing communications strategy aids staff retention, helps employees appreciate the range of pension and wider employee benefits you provide, and therefore improves your return on investment.


In summary, embrace auto- enrolment. Be proactive and realistic about the impact on your business, and plan accordingly.


You can find out your staging date by visiting www.thepensionsregulator. gov.uk.


To gauge an understanding of the decisions you need to make you can speak to Jelf.


Details: 03339-200898 www.jelfgroup.com/aease


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