1. Know your staging date - when you Act
The date that the new law applies to your company is known as your staging date. This date is determined by the size of your largest PAYE scheme as at 1st April 2012. Companies that have PAYE schemes that are shared by multiple employers will have the same staging date in most cases. For multiple companies within one organisation, it is the largest employer that will dictate the staging date and this date will apply to all companies of that PAYE scheme.
For more information about staging dates, please visit http://www. thepensionsregulator.gov. uk/employers/staging-date-timeline.aspx
2. Access your workforce
Workers who will need to be automatically enrolled in a pension scheme are called ‘eligible jobholders’. An eligible jobholder is:
• Aged between 22 and state pension age
• Working or ordinarily working in the UK
• Earning above £9,440
3. Review your pension arrangements
Review your existing pension scheme: If you have an existing pension scheme for your workers, you may wish to consider enrolling all eligible jobholders into this scheme. To do this, your existing scheme will need to qualify as an automatic enrolment scheme - see information on qualifying schemes below.
To be a qualifying scheme, minimum contributions must be made or it must provide a minimum rate at which benefits will build up. A scheme suitable for automatic enrolment must also not:
• Impose barriers to joining the scheme, such as probationary periods or age limits for members
• Require staff to make an active choice to join or take other action prior to joining
• Require the provision of extra information in order to stay in the scheme
4. Communicate the changes to all your workers
You must inform all your workers in writing about the changes detailing how they are affected by the changes. This communication must be provided in writing (which can include being sent by email) and must be specific to the individual.
The duty is on the employer to provide the right information to the right individual, at the right time.
5. Automatically enrol your eligible job holders
There is a process that you will need to follow in order to make an eligible jobholder a member of an automatic enrolment pension scheme. Certain information about your eligible jobholders will also need to be supplied to pension scheme managers for example at specific points in the process.
6. Register with The Pensions Regulator and Keep records
You are required to inform The Pension Regulator how you have fulfilled your new automatic enrolment duties by registering this information online shortly after your staging date. You will also need to maintain specified records about enrolled workers, their status within the scheme, the payment of contributions and the qualifying scheme itself.
7. Contribute to your workers’ pensions
Starting on your staging date, you must contribute to your chosen pension scheme on behalf of your workers. The minimum contribution rates that an employer must pay into their workers’ pension scheme will be introduced gradually over a 6 year period (from 2012 to 2018). This is known as ‘phasing’. The minimum overall contribution will be 2% rising to 8%. Where your employee doesn’t contribute towards the pension, the employer will be expected to contribute the full minimum amount.
Phasing will apply to most, though not all, types of pension scheme (your scheme provider will be able to tell you if phasing applies to you).
For a free Guide to Auto Enrolment please click here for QTACs An Introduction to Auto Enrolment - Workplace Pensions.