The Pension Regulator (TPR) reports that 136,000 small employers began complying with their pensions auto enrolment duties in the first part of 2017 alone. So many more workers are now saving for their retirement with help from their employers. But it doesn’t stop there; more changes to workplace pensions are coming in 2018.
The phased rollout of auto enrolment ensured small and micro employers had plenty of time to prepare ahead of their ‘staging date’. On 1 October 2017, the regime entered a new phase. From this date, any employer taking on staff for the first time immediately comes within the rules for auto enrolment. If you employed staff before 30 September 2017 you will have different deadlines which you can check here.
Ongoing auto enrolment duties
The first step is to assess which of your employees must automatically be enrolled, based on age and earnings. Briefly, staff aged between 22 and State Pension age, and earning over £10,000 pa, (£833 per month or £192 weekly), must be enrolled in a workplace pension scheme. To be compliant, the employer and employee must both make regular contributions to the scheme. The minimum amount that must be put in is also specified in the auto enrolment rules.
An employer’s auto enrolment responsibilities do not stop there. If staff do not need to be enrolled in a scheme, the employer must make a declaration of compliance. Ongoing duties include keeping track of the age and earnings of all staff each time they are paid and managing requests to leave or join a scheme. Every three years, employers must also go through the re-enrolment process with staff who have opted out.
The next major change to the auto enrolment regime will come into effect from 6 April 2018. On this date, the minimum contribution will increase to 2%. It will rise again to 3% from 6 April 2019.
TPR is committed to rigorously checking compliance among employers. Those who break the rules risk being fined and also being named and shamed on the TPR website. TPR has also warned that employers who fail to provide information required for its investigations will be prosecuted. As a case in point, it is already taking action in at least one instance where the employer deliberately did not give staff access to a scheme.