Auto Enrolment - The Basics

The new legislation requires you to enrol all "eligible employees" in a qualifying workplace pension scheme by no later than the compulsory staging date. This date is set by The Pensions Regulator based on the number of employees.

You will receive a letter confirming your staging date along with basic information about your employer duties from The Regulator one year in advance. You will also receive a reminder three months before your date.

The staging date given to you by The Regulator is the latest date by which you need to have your auto-enrolment arrangements in place.

To make sure you are properly prepared, it is recommended that you start your planning 12-18 months in advance.

To find out your staging date please contact us.

From the staging date, the employer has a duty to designate a qualifying workplace pensions scheme into which it will automatically enrol all of its qualifying employees and make contributions on their behalf.

A qualifying worker is anyone aged between 22 and state pension age, with earnings equal to, or greater than, the earnings trigger salary which is currently £9,440.

No employer is exempt from this requirement, the main choice employers face is which pension scheme or schemes to use to comply with the new regulations.

Even if an employer has a workplace pension scheme, it will require reviewing and possibly amendment to ensure it complies with the new regulations.

The Pensions Regulator will police and enforce the new laws. Failure to comply will lead to fines proportionate to the non-compliance and could ultimately result in criminal prosecution.

Employers will have a requirement to educate employees about the implications of auto-enrolment and the direct effect it will have on them.

Employers will need to create systems and processes to ensure that both new and existing employees are provided with relevant information and joined into the scheme at the correct time.

Employees can opt out of the qualifying workplace pension scheme but this can only be done after they have been automatically enrolled.

If the employee does opt-out, automatic re-enrolment is required every three years with a three month window around the anniversary of the original enrolment date.

The employer is not permitted to dissuade the employee from joining the scheme. In particular, the employer is not permitted to provide the member with an opt-out form, it should instead be obtained from a third-party source.