Automatic Enrolment for Employers
Please note, advice on auto-enrolment, occupational pensions, and workplace pensions is primarily regulated by The Pensions Regulator, not the Financial Conduct Authority.
Understanding Automatic Enrolment
Automatic enrolment, introduced by the government in 2012, is legislation designed to bolster retirement savings. The law requires all employers to enrol eligible employees into a workplace pension scheme if they aren’t already in one. While the legislation was phased in starting October 2012, it has now been fully rolled out. Most employers are now required to set up and contribute to a pension scheme suitable for automatic enrolment.
Recognize Your Workforce
To comply with automatic enrolment, you must understand the diverse worker types and the associated employer responsibilities. Some contracts, such as those for agency workers or contractors, may need careful examination to determine employer duties.
Business Software and System Processes
The compliance with automatic enrolment duties often involves process-driven functions. Thus, your business software (including payroll, HR, and pensions administration) should be set up to automate most of these processes, such as tracking workers’ ages and earnings and deducting pension contributions.
Review Your Pension Arrangements
If you have existing pension schemes you’d like to use for automatic enrolment, ensure they meet the specific criteria. This may require modifying the scheme rules or terms and conditions. Understand how the new legislation aligns with your existing pension arrangements, including salary exchange or contractual enrolment.
Communication is Key
You must provide certain information to your workers, like detailing the contributions both they and you are making towards their pension. Ensure each worker receives this information individually and at the right time, especially if they change worker categories.
Ensure Compliance
Compliance with specific employer duties is mandatory. Failure to comply may result in The Pensions Regulator taking enforcement action, issuing a notice, or levying a penalty.
Registration
Employers are required to complete a declaration of compliance for The Pensions Regulator, demonstrating their adherence to automatic enrolment duties. This declaration should be completed within five months of your duties start date.
Remember, the information provided here is based on our understanding of the relevant legislation at the time of writing. For the most up-to-date information, visit The Pensions Regulator website.