Employers need to keep up to date with what they have to do to comply with the pension auto enrolment rules, and to be aware of the forthcoming increases in the rates of contribution.

There are currently around 8.5m people who have been auto-enrolled into a workplace pension by nearly 800,000 employers. But both new and existing employers have certain duties they must perform to stay the right side of the rules and avoid costly penalties.

New employers

New employers, or those thinking of recruiting, need to plan for their auto enrolment duties, alongside other issues such as setting up a PAYE scheme.

Every employer must automatically enrol workers into a workplace pension scheme if they:

  • are aged between 22 and State Pension age;
  • earn more than £10,000 a year (2017/2018), and work in the UK.

A key concern will be the choice of pension provider and ensuring this is compatible with the PAYE scheme. Bishop Fleming can advise on the choice of provider, and can even provide a cost-effective auto enrolment solution.

Within five months of taking on an employee, an employer has to complete a declaration of compliance to let the Pension Regulator know that the rules have been complied with. An employer will also need to make any backdated contributions to the scheme from the date the employee was taken on.

Existing employers

Whilst existing employers will already have gone through the initial process of establishing a scheme, this is not the end of their duties. There are a number of enduring responsibilities to be aware of, including:

  • an ongoing duty to regularly assess staff to see if they need to be auto-enrolled;
  • keeping staff informed of what is happening with the scheme;
  • dealing with staff requests to join or leave the scheme;
  • every three years, auto enrol any employees who initially opted out;
  • complete a re-declaration of compliance within five months of the anniversary of a staging date; and
  • maintain proper records.

The Pension Regulator can also conduct random checks to ensure an employer is complying with the rules, so businesses need to be aware of that.

Increasing contributions

Employer and employee contributions to a workplace pension need to be calculated on an ongoing basis, deducted from wages and paid over to the scheme.

The minimum contributions to a scheme are scheduled to increase on 6 April 2018 and 6 April 2019.

The table below indicates the minimum contributions to be paid for a defined contribution scheme, based on earnings of between £5,824 and £43,000 per annum.

Date effective Employer minimum contributions Employee minimum contribution Total minimum contribution
Up to 5 April 2018 1% 1% 2%
6.4.2018 to 5.4.2019 2% 3% 5%
6 April 2019 onwards 3% 5% 8%

If you would like to discuss auto enrolment with one of our experts, please contact our Payroll team.


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