Under Automatic enrolment (AE), employers must enrol all employees who ordinarily work in Great Britain and who satisfy age and earnings criteria into a qualifying workplace pension and pay at least the minimum level of contributions into the pot.
First introduced back in October 2012, the roll-out was finally completed in March 2018 when the last groups of small and micro employers took on their AE duties.
Since October 2017, all new employers have had immediate pensions duties requiring them to automatically enrol eligible employees into a qualifying pension scheme.
The AE earnings trigger determines who exactly is eligible to be automatically enrolled into a workplace pension, by their employer, in terms of how much they earn. This threshold has been left at £10,000 in the latest review of the AE Earnings thresholds for 2019/20.
The latest review ‘Automatic enrolment: review of the earnings trigger and qualifying earnings band for 2019/20’ contains the proposals for the 2019-20 tax year, as follows:
|Current and proposed automatic enrolment thresholds|
|Trigger||Lower limit qualifying earnings band||Upper limit qualifying earnings band|
As a result of the review, the Secretary of State has concluded that the existing threshold of £10,000 remains the appropriate level at this point in the establishment of AE.
This is said to reflect ‘the key balance that needs to be struck between affordability for employers and individuals and the policy objective of giving those who are most able to save the opportunity to accrue a meaningful level of savings with which to enter their retirement.’
As aforementioned, though all the staging dates may now have passed (meaning all employers now have immediate pensions duties) this doesn’t mean that those who did stage can forget all about Auto-Enrolment. The Pensions Regulator and many employers are now considering their ongoing ‘re-enrolment’ duties.
On the three-year anniversary of their original staging date, employers will need to complete the re-enrolment process.
Unlike their original, predetermined staging date, the employer can select a date to re-enrol from a given re-enrolment ‘window’. Designed to make the process more flexible for employers, the re-enrolment date the employer chooses can be up to 3 months before or after their original staging date.
On this date all of the workers on the payroll will need to be re-assessed and any workers who are eligible, that have previously opted out of the scheme, will be automatically enrolled back into the pension scheme. Employers should also bear in mind that new statutory communications will need to be generated and issued to employees.
Workers will have all of the same opt out rights as before but, as before, they will have to contact the pension provider directly and comply with the necessary steps in order to be removed from the pension scheme and for the opt out refund to be processed.
A Re-Declaration of Compliance will need to be submitted to The Pensions Regulator. For the most part, this follows the same format as the original Declaration and is completed online. It must be submitted within five months of the third anniversary of the staging date.
As with the first Declaration of Compliance, if the submissions are not made on time The Pensions Regulator can issue escalating fines.
Elaine Shaw, Payroll Manager at George Hay, said: “It remains as important as ever to ensure you are compliant with your legal obligations, as an employer, in respect of workplace pensions.”
“Failing to fulfil your responsibilities can be extremely costly for both you and your employees, so it pays to seek professional advice if you’re unsure about what you should be doing.”
At GH Payscheme, George Hay’s specialist Payroll Bureau in Biggleswade, Letchworth and Huntingdon, our team can assist you with administering your chosen workplace pension scheme and help you to ensure that you comply with all of the requirements of Automatic Enrolment.
To discuss your requirements in more detail with one of our experts, call us on 01767 315010 or fill in one of our online enquiry forms.