Since auto-enrolment began in 2012, over nine million people have joined workplace pension schemes. As legislation changes and spot checks happen more often, it may be worth considering using a payroll provider to give you peace of mind that the rules are being followed and to help reduce the risk of arrears and penalties.
Stockport based Bennett Verby have produced a brief summary of the auto-enrolment rules and your duties:
Eligibility is based on age and earnings
You must enrol anyone aged between 22 and the state pension age the first time they reach the earnings threshold of £833 per month or £192 per week. This includes those on variable pay, flexible pay and irregular hours. You can postpone enrolling a member of staff for up to three months, but you must inform them that this is happening.
If someone doesn’t meet the criteria, they may still opt in
With long-term savings at the forefront of financial advice, some of your staff members will be keen to contribute to a pension scheme, even if their age or earnings mean they will not be auto-enrolled.
Staff members who earn over £833 per month but are either side of the age threshold (between 16 and 21 or over state pension age and under 74) can opt in to your scheme. Anyone aged between 16 and 74 who earns between £503 and £833 per month can also opt in. You will need to enrol them into your scheme within a month and make contributions too.
Anyone who earns below £503 per month has the right to join a pension scheme but it does not have to be the one you use for auto-enrolment, and you do not have to contribute.
Requests to opt out
If a staff member wishes to opt out, they must do so in writing within a month of being put into a scheme. You should make sure no further money is removed from the employee’s pay and arrange a full refund of what has been paid into the pension.
The Declaration of Compliance is a form that tells The Pensions Regulator what you’ve done to comply with your auto enrolment duties. You should keep records of contributions and requests to join and leave for six years, except requests to leave, which should be kept for four years. The Pensions Regulator will monitor and take action if payments are not made or your legal duties are not met.
Contributions increases in April 2019
From April 2019, the total combined payments from staff and employer must be 8%, with the employer minimum at 3%. If you pay more than 3%, the employee can make up the difference by paying less than 5%. Employees are given the option to drop out if they cannot afford it.
Outsourcing your payroll also means you won’t have to invest in payroll software and training, meaning you and your employees can focus on your business.
Expert Opinion provided by Bennett Verby