pensions & auto-enrolment 17 Navigating the pitfalls of auto-enrolment


Verity Cruse, an associate in Penningtons Manches LLP’s pensions team, has produced a short practical guide for businesses on steering a successful path through the auto-enrolment process


Auto-enrolment started for larger employers on October 1, 2012. We have reached the staging dates for smaller employers with fewer than 30 employees, and this continues until April 1, 2017. After then, and until February 1, 2018, businesses established since April 2012 must start complying.


The key points for employers when approaching auto-enrolment are:


Plan early


With around 30 administrative tasks for employers to do before staging, it is important to plan early. The Pensions Regulator (TPR) has a helpful planning template on its website or employers could engage a suitable adviser to assist.


Determining which employees are caught


Employers must auto-enrol employees aged at least 22 but


younger than the state pension age, who earn £10,000 or more and are employed in the UK. The obligation seems pretty simple but, in reality, there are some tricky areas to consider, for example:


• does the employee actually have a contract of employment?


• do different elements of pay make up employees’ “qualifying earnings”? (Consider, for instance, bonus payments, commission, overtime payments, pay in lieu of holiday, sickness pay and salary paid via salary sacrifice.)


• does the employer wish to enrol any directors who have contracts of employment?


• if an LLP, will LLP members who are taxed on a self-employed basis be enrolled?


Payroll payment dates


If your payroll payment dates vary according to employees’ hours


worked each week or month, your staging date may not be aligned with those dates. In such circumstances, an employer may rely on a ‘postponement’ from TPR so that the dates coincide. It may be difficult to unravel this later if it is not addressed at the outset.


Continuing obligations


Working towards the staging date is just the start. After staging, besides paying contributions, employers must:


• provide regular information to TPR;


• re-assess their workforce every pay reference period if there is variable


Workplace pensions: Is your business ready?


With 79% of employers being able to recall seeing or hearing an advert (TV, radio or on the web) about ‘Workie’* it’s unlikely you haven’t heard about workplace pensions, but do you know what it means and how it affects your business?


What are your legal requirements?


Under the pensions reform law all UK employers must:


• enrol eligible employees into a qualifying pension scheme


• make mandatory minimum contributions into their employees’ pension schemes.


Who are eligible employees?


As an employer, it is your duty to enrol workers who meet the following qualifications:


• They are between the ages of 22 and state pension age


• Earn more than £10,000 per year • Work in the United Kingdom.


There are some exceptions though; any worker earning less than £10,000 per year needs to request enrolment in the pension scheme. If monthly gross earnings are between £486 and


£833, employers must pay regular contributions into their pension schemes, but not if their monthly gross earnings are £486 or less.


Employees under the age of 22 or over the state pension age and still working can also request to opt in.


Who needs to do this and what happens if I don’t?


All businesses, except individuals who are self-employed are affected by the scheme. Those who do not comply with the new workplace pension legislation will face fines and prosecutions, not to mention loss of credibility.


What do I do next?


The first thing to do is identify your staging date. This is the date by which you need to have enrolled your employees into a qualifying pension scheme. This date is largely determined by the size of your business. With auto-enrolment


THE BUSINESS MAGAZINE – THAMES VALLEY – JULY/AUGUST 2016


well underway for the UK’s largest businesses, it is now the turn of firms with 30 employees or fewer to start their journey towards meeting their auto-enrolment legal requirements. If you haven’t already auto-enrolled, your staging date is likely to be coming up very soon. You can check for certain with The Pensions Regulator thepensionsregulator.gov. uk/employers/staging-date.aspx.


As with any big event it’s best to be prepared. So why not sign up to receive our auto-enrolment countdown by visiting jelfgroup.com/ pensiontips. By signing up you will receive bite-sized information as you approach your staging date, about;


• Identifying who you need to enrol • Picking a pension • Decisions and definitions


• Communicating with your employees


• Ongoing responsibilities. businessmag.co.uk


Want some additional help or support? Jelf Employee Benefits can help you manage all aspects of your auto-enrolment implementation and ongoing administration. We can project manage; design and put in place the systems and processes you need. Where appropriate we can give you access to our auto-enrolment system which has been specially developed to handle all aspects of auto-enrolment administration and ongoing record keeping and employee monitoring requirements. Get in touch with Simon Corderoy or Adam Jeffs to see how we can help.


Simon Corderoy 07980-894917


Adam Jeffs 07748-647673


Jelf Insurance Brokers is authorised and regulated by the Financial Conduct Authority (FCA) not all products and services are regulated by the FCA. JIB137.05.16


*Statistics from The Pensions Regulator Source Zywave


remuneration or changing payroll dates;


• hold records;


• keep up communication with employees;


• regularly review their chosen scheme; and


• every three years, re-enrol eligible staff who are not members of a 'qualifying' scheme.


In summary, where employers prepare in advance and work with TPR over any difficulties, auto-enrolment is reasonably straightforward. But, as a warning to employers, whatever the nature of their business, TPR takes its role of enforcement seriously. It has recently fined Swindon Football Club £22,900 for repeatedly failing to comply with auto-enrolment and not responding to warnings.


Verity Cruse 01483-791800 verity.cruse@penningtons.co.uk penningtons.co.uk


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