Here is a quick reference guide to get you started. Under the Pensions Act 2008 all employers will have to provide a workplace pension for eligible staff by 2018. This is called Automatic Enrolment (Auto Enrolment).
Does Pension Auto Enrolment apply to me?
Auto Enrolment duties do not apply when a company or individual are not considered an employer. For example, you may no longer employ any staff, you have ceased trading, or you’re the director of a company with no other employees. You can check if au applies to you here:
If you believe you’re not an employer at this time you will need to inform the Pensions Regulator (TPR) by completing the online form found here:
When do I need to start Auto Enrolment?
When you need to start Auto Enrolment, known as your staging date (set in law as of 1 April 2012), is dependent on how many people are on your payroll.
You’ll need your employer PAYE reference to find out your staging date (take a look at TPR Auto Enrolment correspondence from TPR, HMRC correspondence regarding your employer status, or your payroll software package). You can find out your staging date here:
However, if you don’t pay your staff through a PAYE scheme, by default your staging date will be 1st April 2017.
Make sure you are ready for Auto Enrolment well in advance of your staging date and have assessed your employee eligibility and communicated any planned changes.
It should be noted that any employer that misses their staging date or does not comply with Auto Enrolment may be fined by the TPR via a Fixed Penalty Notice (FPN) of £400 and / or an Escalating Penalty Notice (EPN) in which fines build up at a daily rate. EPN Fine rates are summarised below:
- Small employers with 1 to 4 staff – £50 per day
- Employers with 5 to 49 staff – £500 per day
- Employers with 50 to 249 staff – £2,500 per day
Which pension provider is right for me?
If you are not an Independent Financial Advisor it can be daunting to find the right pension provider for you and your employees. A good place to start is the Pension PlayPen where you can compare providers:
Check out how to use Pension PlayPen if you’re a Sage payroll customer here:
Making Auto Enrolment easy with the Sage Pensions Module!
With Sage 50 Payroll v20 and above, you can subscribe to the Pensions Module, which has a number of additional options to make processing Auto Enrolment even easier using the wizard tool. You can find a Sage guide to Sage 50 Payroll Pensions Module here http://bit.ly/SagePensionModule
What are the minimum pension contributions for me and my staff?
Contribution to any pension scheme are usually determined by the rules for that scheme. However, minimum contributions have been set for all Auto Enrolment schemes, which will gradually increase over time, as shown here
- From staging date to 5th April 2018 – total minimum contribution 2% (including 1% employer and 1% staff contribution)
- From 6th April 2018 to 5th April 2019 – total minimum contribution 5% (including 2% employer and 3% staff contribution)
- From 6th April 2019 onwards – total minimum contribution 8% (including 3% employer and 5% staff contribution)
Contributions are usually paid as a fixed amount or as a percentage of earnings. If staff pay will be used to calculate contributions you will need to determine which elements of pay are pensionable (e.g. basic pay, overtime and bonus payment etc) taking into account overriding legislative requirements. This information will need to be communicated to your pension provider and reviewed periodically.
Information on Auto Enrolment from the GOV.UK website can be found here:
You can find a guide to Auto Enrolment from the Pensions Regulator here:
You can find a Sage guide to Auto Enrolment here:
Disclaimer: The information in this article was correct at time of publishing. Please note legislation is subject to change by HMRC and the Pensions Regulator. Information sources used in this article include Sage Business Communities and the Pension Regulator websites.