The law on workplace pensions has changed. Every employer with at least one worker will have a new duty to set up and put those who meet certain criteria into a workplace pension scheme and to contribute towards it.
Auto Enrolment is so called, because it is automatic for your workers – they do not have to do anything to be enrolled into the pension scheme. It is however not automatic for you. You will need to take steps to make sure your employees are enrolled into a scheme where appropriate and the required contributions paid over for each payroll run.
It is being rolled out to all employers in a series of fixed ‘staging dates’ so by the end of 2018, all employers will be included.
Auto enrolment represents a huge impact on your business in terms of administrative time and costs to plan, implement and maintain a suitable pension scheme. Contributions and deductions will need to be processed alongside your payroll system.
There are minimum contribution levels every employer must pay into their staff’s pension scheme.
The table below shows the minimum contribution levels, including those applied to the employer based on their gross earnings (but only their earnings between £5,876 and £45,000). The minimum levels of contributions increase in stages, as follows:
|Date||Employer minimum contribution||Total minimum contribution*|
|Before 5th April 2018||1%||2%|
|6th April 2018 to 5th April 2019||2%||5%|
|5th April 2019 onwards||3%||8%|
(* tax relief is received on the employees’ contributions)
It is a legal requirement for employers to automatically enrol eligible employees into a suitable pension scheme. The employer is entitled to deduct the employee’s contribution but must ensure that at least the minimum total is met, unless the employee chooses to opt out.
Employee contributions receive tax relief, so a 4% employee contribution is grossed up to 5%.
So how can we help? Auto-enrolment will inevitably place an additional strain on many small businesses due to the work involved in the new processes such as record keeping and reporting requirements. We can take care of this for you. We can help you find the most appropriate scheme for your business as well as ensuring that you meet your obligations in terms of record keeping and reporting.