Auto Enrolment – is it all over?

Auto Enrolment Qtac

As Auto Enrolment hits its 5th anniversary, the Pension Regulator reports that since 2012 nearly 800,000 employers have undertaken their AE duties with more than 8.5 million people beginning to save in a workplace pension, it is understandable that many businesses may consider the “fuss” about Auto Enrolment is over.

That is not, however, the case.  Auto Enrolment isn’t about a one off project to get a business over the line, it will most definitely impact businesses both large and small for the long term.  There are also still many areas that can easily trip up a business if it doesn’t get things in place correctly at the start.

The evolving needs of the business and a changing workforce

It’s a fact that businesses don’t stand still.  As they evolve and grow, Auto Enrolment will need to be considered across areas including staff recruitment and changing patterns of work as well as financial forecasting.  New businesses are starting up in the UK at a phenomenal rate every day and from last month they will all have a legal responsibility to put their employees into a pension scheme from the moment they employ them.

It is clear that ongoing assessment of employees for the purposes of Auto Enrolment therefore needs to be fully ingrained into the HR process and financial forecasting of the business, as the provision of a workplace pension becomes part and parcel of running a business.

The cost of non-compliance

Despite the much publicised high penalties for non-compliance and wide ranging promotion of the Auto Enrolment changes there are still considerable numbers of businesses that fail to take action either through deliberate act or simply failing to realise that they are impacted.

The Pension Regulator in its latest quarterly briefing reported another increase in the number of enforcement actions being taken for non-compliance.  According to their report the quarter ending September 2017 accounted for around 25% of all of the AE enforcement actions ever taken.

Whilst focus is often on the compliance around businesses moving into the process it’s important for businesses to realise that monitoring and enforcement isn’t just around the setting up of a workplace pension.  The Pension Regulator is working directly with Pension Providers to identify schemes that have been set up but contributions and schedules are not received.

It is clear therefore that as the backlog of businesses stage, ongoing compliance will shift its focus on areas such as missed contributions.  Businesses need, therefore, to ensure that systems are in place to support ongoing administration as the business changes, and not just to get them over the initial hurdle.

Next Stage: Automatic Re-enrolment

It should be clear from above that AE is an ongoing process, changes to the make-up of the business will mean constant assessment of its workforce. There is also the fact that every 3 years every business will have to go through the re-enrolment process.

Whilst many SME’s have only just or are about to start their Auto Enrolment journey, larger organisations have already started the process of re-enrolment and numbers will be increasing every year.

Auto Re-enrolment should be a straightforward process if the systems and processes are in place from the start but it can still cause businesses a headache if not properly prepared for and managed.

So what is Automatic Re-enrolment?

In essence Automatic Re-enrolment is similar to the process the business went through at the time of its staging date.  Employees who are not already active members of the pension scheme need to be automatically re-enrolled if they meet the eligibility criteria.

The business must send out statutory Auto Enrolment letters to these employees in line with the Pensions Regulator compliance, and it must also complete another Declaration of Compliance within 5 calendar months of the third anniversary of its staging date.

Further details about the Automatic Re-enrolment process and how Qtac can provide support is located here.

Increasing Pension Contributions

April 2018 sees the first increase in the contribution payable by both businesses and their employees to their workplace pensions.  The total minimum contribution from 6th April will be 5% (2% from Employer and 3% from Employee) which will not only have an impact on business overheads but employees take home pay in a climate of lower than inflation salary increases.

It is the responsibility of the business to ensure that these higher contribution levels are implemented on time to ensure that the pension remains a qualifying scheme.  If this happens then the business will not be meeting its legal obligations and can face enforcement action.  Businesses therefore need to ensure that their pension product, payroll systems, and internal processes are ready to implement these increases.

So as to the answer to the question, is Auto Enrolment all over?  The above highlights a number of areas that a business needs to be aware of when it comes to the ongoing management of their workplace pensions.

Help and Advice

If you need help and advice about any aspect of your payroll and in particularly Auto Enrolment get in touch with the team at Qtac.  Our range of software products fully support the Auto Enrolment process or alternatively for smaller businesses our outsourced payroll services can provide a cost effective, hassle free way to ensure compliance.