Are you an employer or thinking about taking on your first member of staff, or, as an employee, do you know the latest regulatory changes? Employers need to make sure they are ready for automatic enrolment.
Under the Pensions Act 2008, every employer in the UK must put certain staff into a workplace pension and contribute towards it. This is called "automatic enrolment".
The Pensions Regulator (TPR) is responsible for ensuring that all employers comply with workplace pension law. It's important that you understand what you'll need to do and the date that the law will apply to you. TPR has guidance and support which will help you comply with your automatic duties on time.
Under these laws, whether you're a hairdresser, an architect or employ a personal care assistant, once you employ at least one person you are an employer and you'll have certain legal duties. You'll need to decide how much to pay, check if they have the legal right to work in the UK, determining whether you need to register as an employer with HMRC, take out employer's liability insurance, among others. Automatic enrolment is just one of these steps.
What will employers need to do?
They must assess staff to see if they meet the age and earnings criteria to be put into a pension scheme for automatic enrolment.
- Those staff who meet the age and earnings criteria will need to be put into a pension scheme that qualifies for automatic enrolment, and the employer pay into it.
- Each member of staff will need to be written to within six weeks of when duties started (whether or not staff meet the criteria to be put into a pension scheme) to tell them how automatic enrolment applies to them.
- Employers will also need to tell TPR how they have met their legal duties by completing a declaration of compliance. This is a legal requirement which must be completed and submitted to TPR within five months of the employer duties start date.
TPR has information and guidance on their website to help small employers understand what they need to do, and by when.
When will employers' duties start?
If you already employ staff, or plan to take on someone before 1 October 2017, and have registered with HMRC, then you will be given a staging date by TPR, who will write to you to confirm when this will be, and what you'll need to do.
If you employ your first member of staff from 1 October 2017 onwards, then your legal duties for automatic enrolment will begin on the day your first member of staff starts work. You should start preparing early for this to work out what you'll need to do.
What happens if staff are not in a PAYE scheme?
If your member of staff earns £113 a week (£490 a month) or below, HMRC may not require you to set up a PAYE scheme. However, you do still have certain automatic enrolment duties from the day you first take on your first member of staff:
- You must write to your staff to tell them how automatic enrolment applies to them.
- If you staff then write to ask you to put them into a pension scheme, you must set this up for them but you don't have to pay into it.
When you start paying a member of staff more than £113 per week, you must set up a PAYE scheme with HMRC. You must also assess your member of staff to work out if they need to be put into a pension scheme that you also pay into. After you set up your PAYE scheme, TPR will write to you and ask you to complete a declaration of compliance (where you declare how you've met your duties) by a specific date.
Whether you have staff to put into a pension scheme or not, all employers have ongoing duties for automatic enrolment. Each time you pay your staff (including new starters), you must monitor their age and earnings to see if they need to be put into a pension scheme and how much you need to pay in. You will also need to manage requests to join or leave your scheme.
Where can I do for more information and support?
TPR has guidance and tools on their website that will help you meet your duties. You may also with to speak with your business adviser, for example your accountant, to see what support they are able to offer you.
Key considerations to bear in mind
- Make sure you know what you need to do and by when - you'll have duties even if you only employ one member of staff.
- Work out the costs which may be involved in terms of time and money - TPR have guidance to help you think about one-off costs involved in setting up automatic enrolment, as well as the ongoing cost of paying money into the scheme and managing the process.
- Decide who will complete the tasks you need to undertake. While you can carry out the automatic enrolment tasks yourself, you may choose to ask your business adviser for extra support. Make sure you understand and agree which tasks you and they are going so that nothing is missed.
- It is important you nominate a contact for TPR to send communications to about what to do and when
What do I need to do and by when? www.tpr.gov.uk/employers
Nominating a contact – www.tpr.gov.uk/nominate
Choosing a pension scheme – www.tpr.gov.uk/scheme
Declaring compliance – www.tpr.gov.uk/declaration
Your questions answered – www.tpr.gov.uk/questions