Approaching the next pensions auto-enrolment cycle
The next auto-enrolment cycle is approaching and we’re here to help. Automatic Enrolment has now completed all planned stages, so all companies are now included in the legislation.
As an employer, it’s your responsibility to ensure you remain compliant. Whether you’re tackling auto-enrolment for the first time or concerned that you’re still meeting all your pension duties, we hope the following guide will answer your key questions.
The auto-enrolment cycle process
Re-declaration – Completed forms must be submitted to The Pension Regulator on the third anniversary of your pension scheme.
Re-enrolment – Any employees that have opted out of the pension scheme in the past three years need to be re-enrolled. Even if you don’t have any staff to put back on to the scheme, you must file your re-declaration of compliance.
Two key dates
Your legal pension duties starts on the day your first member of staff joins your company, if they meet eligible criteria. This date marks the start of paying into your pension scheme, which you will subsequently pay contributions into on subsequent paydays. According to the Pensions Regulator, you must have a pension scheme if you employ at least one member of staff who is aged between 22 and state pension age and earns more than £833 per month.
Declaration of compliance
Once you have set up your pension scheme, you are required to fill out a declaration of compliance form on time each year to ensure your company is adhering to your automatic enrolment duties. The Pensions Regulator will write to you to inform you of your specific deadline date. If in doubt, download the Pension Regulator’s declaration of compliance checklist.
Postponing the auto-enrolment cycle
There are very few restrictions placed on company owners wanting to postpone auto-enrolment for up to three months but some choose to do so if they have many seasonal staff, or staff are undergoing a probationary period. You must inform your staff of the delay to the pension scheme within six weeks of an employee becoming eligible for automatic enrolment, which covers:
- The date your legal pension duties started
- An employee’s first day of employment
- Any other date that a staff member becomes eligible for auto- enrolment
Although you have chosen to postpone auto-enrolment cycle, staff can choose to pay into the pension scheme during the delay.
If you don’t act
Meeting pensions legislation is a legal duty not a nice-to-do. Companies that do not meet their pension deadlines may face enforcement action, including fines. We don’t want this to happen, so please get in touch with Cardens maintain compliance.
Paying more or less than the Automatic Enrolment minimum
Statutory minimum contribution levels are set for Automatic Enrolment to ensure the pension scheme legislation isn’t abused. However, if staff cannot afford a 5% contribution at a time, or they would rather not take part, they can opt out of the scheme altogether or reach an agreement with their employer to set up a lower contribution rate.
Conversely, employers and staff are free to pay more into the scheme should they wish and the latter should set out the amount with payroll. You need to ensure that you update your payroll system and pension provider to reflect the increase.
Keep staff informed
You must ensure that members who are contributing via salary exchange/sacrifice are aware of how this can affect any existing benefits, like Statutory Maternity Pay, mortgage applications and more.
Following the completion of Automatic Enrolment, all companies must be prepared for regulation inspections. The Pensions Regulator will usually notify you of upcoming inspections, but they can also drop in without notice. If in doubt, download its inspection guide to prepare for the big day.
Stay in touch
We hope that we have equipped you with the information you need to feel confident in the auto-enrolment cycle process. If you would like further information please get in touch: book a free consultation.