It is essential that staff records, including:
- dates of birth
- National Insurance numbers
- contact details
- amounts paid into the pension scheme each pay period
are correct and up to date as they will be needed to run automatic enrolment effectively.
Checking payroll software
If your client has payroll software:
- check that it's designed to carry out all the automatic enrolment tasks to help them meet their ongoing automatic enrolment duties
- that isn't designed to carry out all the automatic enrolment tasks, your client should consider updating their software, read our page on working with clients without compatible payroll software
- they can ask their payroll or pension provider if they have a checklist of the information they’ll need and the tasks to carry out
You should also make sure that:
- your client’s payroll software or process will work with their pension scheme to allow easy transfer of data between the two, see our page on checking payroll software supports automatic enrolment
- if someone else manages your client's payroll, ask them to check and confirm the payroll software or process will work with the pension scheme
- your client understands what tax relief method their pension scheme uses and ensure that the correct method is input into the payroll software
See our “Quick guide to setting up payroll (PDF, 179kb, 4 pages)” for more information.
Once you've ensured your client’s payroll process works with automatic enrolment, it will help your client to be ready to pay contributions into a pension scheme and send data to their pension provider on a regular basis. It will also help them to enrol staff as they become eligible.
What letters are sent to my clients from TPR?
The Pensions Regulator (TPR) sends out letters and emails to employers to support them with their automatic enrolment duties. These letters form a series of communications which are sent to your clients during the automatic enrolment process, helping them to understand their duties and guiding them through what to do next.
You may find it useful to familiarise yourself with these, to help your clients understand what do to and by when.
This resource may help if you have more detailed questions on the above:
- Detailed guidance 2: Getting ready (PDF, 141kb, 37 pages)
What steps an employer can take to prepare for automatic enrolment including setting up a payroll
- Detailed guidance 9: Keeping records (PDF, 97kb, 13 pages)
Read detailed guidance on how the employer and pension scheme must, by law, keep certain records.
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If your client already uses payroll software, check how many automatic enrolment tasks it can carry out.
Speak to the person who deals with your client’s payroll to make sure the software, or other payroll processes they have, can perform the following tasks each pay cycle:
- assess your client’s staff to work out who to put into a pension scheme
- hold the information required for automatic enrolment, including staff names, addresses, dates of birth and earnings, so your client pays the right amount of contributions into a pension scheme for the right people at the right time
- calculate how much your client and their staff will need to pay, including using the correct tax relief method
- generate and send the correct staff data – including information on pension contributions – to your client’s pension scheme and in the format required
- generate communications (eg letters or emails) for your client’s staff at the right time – although your client may choose to do this using our template letters, particularly if they only have a small number of staff
- handle staff requests to opt into or join your client’s pension scheme, as well as stop deductions and process refunds for staff who opt out (or leave) it
- a flexible postponement function (ie can it adjust the postponement period to suit different types of workers)
- keep records for up to six years
If your client’s software can't complete these tasks, they should consider updating or changing it – or speak to their pension provider to see if it can carry them out instead.
If your client manages their payroll without any software, or uses HMRC's Basic PAYE Tools (BPT), they’ll need their own process to assess their staff and calculate contributions. Your client also needs to find out from their pension provider how to provide this information to them. For more information, go to working with clients without compatible payroll software.
If you are more experienced in payroll software and processes or would like further information to give to whoever does your client’s payroll, we have additional guidance on what to test in a quick guide to setting up payroll (PDF, 84kb, 4 pages).
- We have tools and information so that you can help your client meet their duties.
- The HMRC Basic Payroll Tools will not assess your client’s staff or supply information to their pension scheme.
Assessing who to enrol
One of your client’s automatic enrolment duties will be to pay regular pension contributions in respect of staff they’ve enrolled into their workplace pension scheme, as well as any who choose to opt in. You can find information on how to calculate contributions and the contributions rates for 2018 and onwards in our page on working out your client’s costs.
We are unable to show you exactly how much your client will have to pay as the exact calculation method will be determined by the pension scheme they choose. Therefore, it is important your client understands from their pension scheme how to calculate pension contributions. We advise you or your client to contact their pension scheme to find out this information.
The law has set a minimum level for employer contributions – this is 2% until 6 April 2019. The calculation example below uses the minimum contribution levels, and contributions are calculated based on earnings between a lower and upper threshold. The minimum level is a common calculation method used by many schemes. However, other pension schemes may use alternative methods such as calculations based on all earnings or alternative thresholds.
The minimum contribution level for the current tax year is a total contribution of 5% (with at least 2% of that contributed by the employer). The minimum contribution level is calculated based on pensionable pay between the following lower and upper qualifying earnings levels.
|2018 - 2019||Annual||1 week||1 month|
|Lower level of qualifying earnings||£6,032||£116||£503|
|Upper level of qualifying earnings||£46,350||£892||£3,863|
- A staff member earns £200 a week. Weekly earnings are above the lower earning threshold of £116, so £200 - £116 = £84 of earnings to calculate contributions against. Therefore:
- 5% of £84 = £4.20, the minimum total contribution
- 2% of £84 = £1.68, the minimum amount the employer must contribute as part of the total
- £2.52 the remaining 3% which the staff member will contribute (unless the employer opts to pay all or part of it depending on the scheme rules).
- A staff member earns £900 a week. As contributions are only calculated on pay between the upper and lower thresholds, pay above the upper threshold is disregarded and the total is reduced to £892. Applying the lower threshold as well, £892 - £116 = £776 of earnings to calculate contributions against. Therefore:
- 5% of £776 = £38.80, the minimum total contribution
- 2% of £776 = £15.52, the minimum amount the employer must contribute as part of the total
- £23.28 the remaining 3% which the staff member will contribute (unless the employer opts to pay all or part of it depending on the scheme rules).
You can find help on the actions to consider to ensure your client’s payroll process can support automatic enrolment on checking records and payroll processes.
If you are unsure of whether your client’s payroll software is designed to carry out all the tasks to help them meet their ongoing duties, read checking payroll software supports automatic enrolment.
If your client manages their payroll using HMRC's Basic PAYE Tools, please be aware that HMRC will not assess your client’s staff or supply information to their pension provider.
Basic assessment tool - pension contribution calculator
This tool is a staff assessment and pension contribution calculator for automatic enrolment, in Microsoft Excel (.xlsx) spreadsheet format.
It has been tested for compatibility with Microsoft Excel and Apache OpenOffice Calc v4.1.2 using Microsoft Windows operating systems.
The tool allows you to work out if you have any staff who need to be put into a pension scheme, and how much you must pay in contributions into it.
In order to use this tool to work out contributions you will need to have agreed with the chosen pension scheme:
- the percentage of earnings that will be paid by the employer and their member of staff into the scheme
- what form of tax relief is being used.
This tool is only valid for pay days that fall on or after 6 April 2015 up to and including 4 April 2019. Please note that we cannot guarantee that it will continue to be supported after this date with further updates.
Please note that the pension scheme may require you to calculate contributions using a different formula to that used in the tool.
It is the responsibility of employers to ensure full compliance with their duties under the Pensions Act 2008 and other pensions legislation. This tool is provided to assist employers and whilst we continually endeavour to ensure the proper functioning of the tool, the regulator cannot accept responsibility for any loss, disruption or damage that may arise from its use.
Pension contributions for HMRC Basic PAYE Tools users
As part of completing their real time information return, your client will need to input pension contribution amounts for the member of staff (where applicable) into the HMRC Basic PAYE Tools.
When your client sets up their pension scheme, they will agree with the scheme:
- the percentage of earnings that will be paid by the employer and member of staff
- which earnings will be used to calculate pension contributions (the ‘pensionable earnings’), for example ‘qualifying earnings’, ‘basic pay’, or ‘all pay’
- when pension contributions are to be paid (the ‘due date’)
Your client should ask their pension scheme how much the contributions should be and when they should pay them. They can then input this information into the Basic PAYE Tools. Your client will need to know whether contributions should be paid from gross pay (commonly known as a ‘net pay arrangement’) or net pay (commonly known as a ‘relief at source’ arrangement). Make sure your client checks this and inputs the corresponding gross or net pension contributions into the tool.
For more information about contributions, go to our page on working out your client’s costs.