Employer Alert! Key Basics you need to know about Auto Enrolment in the United Kingdom

One of the largest shake-ups to UK workplace legislation is taking place right now, and if you have employees in the UK you need to know about this.

In October 2012, the UK Government introduced Auto Enrolment (AE); it will affect all employers in the UK by 2018. Starting from October 2012 there are new duties on employers to help more people save for their retirement.  As an Employer, you will be required to:

  • Provide qualifying pensions schemes for your employees.  There can be multiple or single schemes as long as they meet the qualifying scheme guidelines outlined by the Pension Regulator.  (See below)
  • Automatically enrol ‘eligible jobholders’ into the scheme(s) through the Pension administrator directly.
  • Complete the assessment of your current workforce into three worker categories.  The pension providers will work with you to advise, in detail, the categories and help place the employees accordingly.
  • Tell eligible jobholders they have been automatically enrolled and they have the right to opt out.
  • Tell other workers they can opt into the pension scheme.
  • Register with the Pensions Regulator and give them details of your qualifying pension scheme and the number of people that you have automatically enrolled.

Since October 2012 only the largest of employers have fallen under the new rules; however, more and more employers will have fallen under the new rules as 2014 progresses.

An Employer’s staging (i.e. the date that the company will need to comply with AE legislation) date is dependent on employee headcount. The Pensions Regulator will write to you confirming this 12-18 months beforehand.

Auto Enrolment will require you, the employer, to take steps to ensure that your pension scheme and internal administration are AE compliant.

You will need to supply the below information to your payroll provider at least 1-3 months prior to your staging date to ensure your payroll processing compliance.

  • Details of your qualifying pension scheme
  • How the pension contributions should be calculated
  • The default percentage contributions

Upon receipt of above, your payroll provider should be able implement your chosen pension scheme in their payroll software for processing and deduction.  They will not set up the pension scheme and produce the various employee correspondences that are a requirement of the legislation, as this will be an internal administrative task.

Celergo strongly recommends that you contact your pension provider now to see if any current pension arrangement is compliant, or indeed, if you need to set up a new compliant scheme.

Don’t hold off in looking into Auto Enrolment now as it will creep up on you before you know it!




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