The Pensions Act 2008 now ensures that every employer in the UK must contribute to workplace pensions for their staff. Known as ‘automatic (auto) enrolment’, it has become a familiar feature as part of the induction procedure for new starters.
Previously, The Pensions Regulator (TPR) informed companies of their ‘staging date’, by which all their auto enrolment duties needed to take effect.
However, from 1st October 2017, the staging date was replaced by a ‘duties date’ for new employers.
This means that, for employers who are taking on staff for the first time, legal duties for automatic enrolment will begin on the first day the new staff member starts work. The duties date will apply even if just one person is to be employed for the first time.
See The Pension Regulator website here which is very useful and provides dedicated guidance for new employers, as well as advice for companies that have employed new staff before 2nd april 2017 of course.
The effect of the change:
- One particularly significant change the duties date brings is that the start of the auto enrolment process can now take place on any day (previously this would be on the first day of the month).
- Additionally, it could be that new employers will need to commence auto enrolment duties before obtaining a bank account or PAYE reference.
As previously required, new staff must be assessed to establish if they meet the criteria for auto-enrolment into a pension scheme.
Staff must be aged between 22 and up to State Pension Age, and earn over 10,000 per year (£833 per month, or £192 per week).
A Declaration of Compliance must be submitted to The Pensions Regulator, even if none of your staff meet the auto enrolment criteria.
The Pensions Regulator website provides guidance for new employers, as well as advice for organisations that have employed new staff before 2nd April 2017.
For employers already in the auto-enrolment process, increased pension costs need to be planned for as in April 2018 the following changes to pension contributions will take effect:
|
Date |
Employer minimum contribution |
Total minimum contribution |
|
Employer staging date to 5th April 2018 |
1% |
2% (including 1% staff contribution) |
|
6th April 2018 - 5th April 2019 |
2% |
5% (including 3% staff contribution) |
|
From 6th April 2019 |
3% |
8% (including 5% staff contribution) |
We have partnered with an excellent A-E pension provider called Smart Pension for any clients or potential clients who need to set up their auto-enrolment pension scheme to ensure legal compliance. Please contact us for further details.
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