Auto Enrolment

What is Auto-Enrolment?

The Pensions Act 2008 introduced new duties for all UK employers.
If you own a business that employs one worker or more you’ll need to:

• Set up a workplace pension scheme that meets the new rules
• Automatically enrol all eligible workers
• Pay contributions into the retirement pots (pensions) of eligible workers
• Enrol other workers if they ask to join the scheme

Conditions for Auto-Enrolment

The employer must automatically enrol all employees into a pension scheme and make contributions to pension if all the following apply:

Are Your Employees are classed as a “Worker”?

A workers classification criteria is:

• You have a contract or other arrangement to do work or services personally for a reward
• The reward is for money or a benefit in kind, e.g. the promise of a contract or future work
• You only have a limited right to send someone else to do the work (subcontract)
• You must turn up for work even if you don’t want to
• Your employer must have work for them to do as long as the contract or arrangement lasts
• You are not doing the work as part of your own limited company in an arrangement where the ‘employer’ is a in fact a customer or client
• ‘Qualifying earnings’ are usually the amount you earn before tax between £5,824 and £43,000 (2016-17) a year
• Qualifying earnings are usually the amount you earn before tax between £5,824 and £43,000 (2016-17) a year

Exemptions from Auto-Enrolment

Automatic enrolment duties don’t apply when a company or individual are not considered an employer.

You won’t have any duties if you meet one of the following criteria:

• You’re a sole director company, with no other staff
• Your company has a many directors, none of whom has an employment contract, with no other staff
• Your company has many directors, only one of whom has an employment contract, with no other staff
• Your company has ceased trading
• Your company has gone into liquidation
• Your company has been dissolved
• You no longer employ people in your home (cleaners, nannies, personal care assistants, etc)

Employer Vs Employee Duties

Deadline to Enrol

Auto-enrolment is being phased in over several years, starting with the largest employers and eventually taking in people who employ just one person.

Your staging date is the deadline by which you’ll need to have a scheme in place and be ready to enrol workers and start making contributions to their pension pots.

You can find out your staging date using the Pension Regulator website tool by clicking here

Please note we are not Pension Advisors therefore we cannot give you advise on what may be the best pension scheme for your business. We strongly advise you seek independent advice on the pension scheme that will suit your business and employees first. Once you have selected your pension scheme, we can then help get this set up on your payroll scheme.