Automatic enrolment - know the basics
Thursday 28 July 2011
The Pensions Regulator has released online interactive tools to help smaller businesses to begin preparing for automatic enrolment.
By filling in basic information, such as their PAYE reference, the number of people they employ and salary information, employers can find out more detail about:
- when the changes to pensions law will affect them
- which staff need to be automatically enrolled into a pension scheme
- how to automatically enrol staff
- how much they will need to contribute to their staff’s pension
The feel of the interactive tools should be familiar to many users, as they are similar in style and format to other online financial and budgeting tools and ‘ready reckoners’.
Minister for Pensions Steve Webb said:
“We know that easing burdens on small employers will be key to making automatic enrolment a success. That is why I’m very pleased that the regulator’s new tools will be a simple and practical way for small businesses to learn about their duties.”
Bill Galvin, chief executive of the regulator, said:
“Workplace pensions law is changing and every employer will have to act. Automatic enrolment will not affect the bulk of small businesses until 2015 or 16. We nevertheless urge all employers to take some time right now to look up their automatic enrolment duty date so that they know when the new law will apply to them - and make a note in the diary to take action in plenty of time. The regulator will also write to all UK employers at least twice in the lead up to their duty date.”
In addition to the interactive tools, the regulator has recently published a range of information of help for employers, pension scheme managers, and professional advisers:
- Summary of duties – a five-page overview of the new duties for employers: Workplace pensions law is changing...
- Create your plan for automatic enrolment - This planner has been designed to help you identify what you'll need to do to prepare for automatic enrolment.
- Trustee checklist – aimed at trustees of existing schemes, this sets out some of the issues that should be taken into account when current pension schemes are considered for automatic enrolment: 5-step action checklist for trustees [We have updated this guidance - view our guide on main steps to automatic enrolment]
- Detailed guidance – this covers all aspects of workplace pension reform legislation, and is designed to be suitable for large employers with experience of providing pensions, advisers and intermediaries
- Software guidance – released in April (updated July) to over 500 payroll professionals, this guidance is helping payroll software developers implement changes to their products, better enabling them to support employers: A guide to workplace pensions reform for software developers
Automatic enrolment is introduced on a gradual or ‘staged’ basis from October 2012 to February 2016 depending upon employer size. From next year, the UK's largest employers will have to enrol all eligible workers into a qualifying pension scheme. Letters marking 18-months to go have already been sent to the chief executives of those employers with the earliest staging dates. Eventually an estimated 1.3 million employers will be affected.
The Pensions Regulator is the regulator of work-based pension schemes in the UK, with objectives to protect members' benefits, promote good administration and reduce the risk of calls on the Pension Protection Fund.
In the 2008 Pensions Act, and corresponding Northern Ireland legislation, The Pensions Regulator was given a new statutory objective to maximise compliance with employer duties (including the requirement to automatically enrol eligible employees into a qualifying pension provision and pay a minimum contribution) and with certain employment safeguards.
Between October 2012 and September 2016 employers will be required to automatically enrol all their eligible jobholders into a qualifying pension scheme and make a minimum contribution of a jobholder's qualifying earnings into the scheme (this contribution will be increased in phases).
An eligible jobholder who reaches 22 and who has not reached pensionable age must be automatically enrolled in a qualifying scheme by the employer. Qualifying schemes are pension schemes that satisfy the quality criteria prescribed in the Pensions Act 2008. The criteria establish a minimum standard for the level of contributions made to the scheme or the level of benefit provided.
David Hannant: 01273 811824
Ben Lloyd: 01273 627208
Katherine Long: 01273 811859
Out of hours: 01273 648496