Payroll Information, Automatic Enrolment. As you may be aware, workplace pension law is changing. All employers will be legally obliged to help their workers save for retirement. If you don’t comply you will face substantial fines or even imprisonment. This is because the Government may not be able to afford to keep state pensions at their current level as people are living longer and therefore sustaining longer retirements so their pension funds need to be bigger. Automatic enrolment is the solution. The Pensions Act 2008 introduced new legislation to encourage employees to save for retirement. Auto Enrolment makes it easy for employees to contribute to a pension scheme and they will also benefit from contributions from their employer. The statutory contribution levels will be phased in giving you time to adjust. The table below shows the phased payments – the minimum level of contributions put into a ‘Defined Contribution Scheme’ by employers and workers. The minimum amount increases over five years until all employers meet their obligations. Date Employer minimum contribution Total minimum contribution Before 30/09/2017 1% 2% 01/10/2017 – 30/09/2018 2% 5% 01/10/2018 onwards 3% 8% The law has already come into force for large employers, with smaller employers following over the next six years. Each employer has its own staging date (when auto-enrolment begins). You will be contacted by the Pension’s Regulator 12 months before this date. You may postpone enrolment for up to three months or you may bring forward your staging date. All eligible employees will be automatically enrolled but they can opt-out within one month of the staging date or their start date. It is illegal to encourage workers to opt out (for example, with a bonus or withholding a pay rise). If an employee is not eligible, he or she may have a right to opt-in or join. The table below shows how employees fit into each category. Earnings (Figures for 2015/16) Age From 16 - 21 From 22 - SPA From SPA to 74 £5824 pa £486 pm £112 pw & below Has a right to join a pension scheme Over £5824 up to £10,000 pa Over £486 up to £833 pm Over £112 up to £192 pw Has a right to opt in Over £10,000 pa £833 pm £192 pw Has a right to opt in Automatically enrol Has a right to opt in If you have a pension scheme already, you will need to examine whether or not it qualifies for automatic enrolment according to the rules set by DWP. To check if your scheme qualifies, please visit http://www.thepensionsregulator.gov.uk If it is suitable, you can confirm this through ‘certification’. If it is not suitable, you will need to amend your current scheme or get a new scheme. You are required to complete your declaration of compliance (registration) with the regulator within five months of your staging date, even if you have no employer duties for your staff. You will also need to re-register every three years. You need to inform employees in writing about automatic enrolment, the type of scheme chosen, their right to opt out or opt in, any changes and how they affect them. You will find lots of information at www.thepensionsregulator.gov.uk. If you want any more information regarding any of the above please don’t hesitate to contact us. Do you run your own payroll? – • Do you know what you need to do and when? • Have you got software compatible with automatic enrolment and can you afford to upgrade? • Have you got time to complete the extra tasks necessary every payroll run? Do you receive a payroll service from another accountant? – • Are they giving you the help and support you require? • Are their extra charges reasonable? We understand this is going to be a difficult transitional period for you. If you have answered ‘NO’ to any of the questions above, contact us.
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