As a result of automatic enrolment, millions of employees now have the opportunity to start building savings for their retirement.
Under the Pensions Act 2008, every employer in the UK must put their qualifying employees into a pension scheme and, where appropriate, pay contributions. This is called ‘automatic enrolment’.
If you employ at least one person you are an employer and you have certain legal duties. Get to know how automatic enrolment applies to you by visiting The Pensions Regulator employers’ pages.
Are you currently employing someone?
If you are it’s important that you understand what to do and by when so you can meet your automatic enrolment duties. You can do this by using The Pensions Regulator’s online tool to check your duties.
If you deduct income tax and National Insurance contributions from the wages of the person you employ, then you are usually their employer. If you have used an agency to hire the person and the agency pays their National Insurance contributions, the agency is the employer and you don’t need to do anything. Find out how automatic enrolment applies to you using the online tool on The Pensions Regulator’s website.
To help employees get used to saving regularly for their retirement, the minimum amounts that employers and their staff must pay into their automatic enrolment scheme increased in April 2018 – with the remaining planned increase taking place on 6 April 2019.
As the employer, you must make a minimum contribution towards this increased amount and your employees must make up the difference. If you decide to cover the total minimum contribution required, your employees won’t need to pay anything.
|Date effective||Employer minimum contribution||Staff contribution||Total minimum contribution|
|Currently until 5 April 2019||2%||3%||5%|
|6 April 2019 onwards||3%||5%||8%|
NB You and / or your employees may already have chosen to pay more than the minimum contributions. If your payments are greater than the increased minimum levels, you will not need to pay any more.
The amount you and your employees pay into the pension scheme may vary depending on which pension scheme you choose. However, by law, the employer has to pay at least the minimum amount into the scheme. Find out more about contribution increases on The Pensions Regulator’s website.
Visit The Pensions Regulator’s website and use the online tool to find more information on what you need to do and by when.
Automatic enrolment is a continuing responsibility for employers, and there are ongoing duties to carry out after you’ve completed your declaration of compliance.
For example, each time you pay your employees, including new starters, you must assess 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 must keep records relating to your scheme, and manage any requests to join or leave it.
Find out more about the ongoing duties you have as an employer on The Pension Regulator’s website.
Once you have set up a pension scheme and put your eligible staff into it, your legal duties don’t end there. You must continue to make the payments that are due into the scheme every time you run payroll. The Pensions Regulator (TPR) monitors the contributions that are paid into workplace pensions, and can tell if payments that are due are not being made into your staff’s automatic enrolment scheme. TPR will take action if you fail to comply with your ongoing legal duties, and you may need to backdate any missed payments.
Every three years you’ll need to put any of your eligible employees who previously opted out, or stopped saving into your pension scheme, back into it. This is called re-enrolment – The Pensions Regulator has information on their website about this.
Get to know your responsibilities. It’s the law.
The Pensions Regulator is a public body set up by the UK Government to regulate work-based pensions. There is information and help available on their website and they may write to you about your automatic enrolment duties as an employer.