Workplace pensions - the employer's duties - part one

We have already discussed what type of pension plan can be used, which employees it affects and how much the employer and employee must pay, so this article deals with the employer’s duties relating to setting up a scheme, or schemes, that will ensure that their obligations are met.
The list of tasks that make up the employer’s duties is lengthy and is better broken down into several parts. Additionally, a number of the items on it merit further explanation. These will be provided in subsequent articles.

Designing your scheme
You will need to consider:

  • The type of pension scheme you will use. An explanation of the options provided in our article on 13 January 2014.
  • Whether you will offer the same contribution basis for every employee or have different levels of employer contribution for different groups of staff.
  • Whether you will phase in contributions, as explained in our article on 24 January 2014, or take the option of moving straight to the minimum contributions that will be due without phasing, from October 2018.
  • Whether you want to use Salary Sacrifice. We will explain Salary Sacrifice in a separate article, but it is important to note now that an employee accepting salary sacrifice as the basis of their contributions will be voluntarily joining the scheme and will be deemed to have opted in early.
  • What your default investment option for your employees will be and;
  • Who you wish to use as your pension provider.

Registering your pension scheme

Once you have decided who your pension provider is to be and have received your scheme details, you will need to register this with The Pensions Regulator. You will normally receive help with this from your pension provider.

Assessing your workforce

It is essential that you identify who falls into the categories identified in our article of 15 January 2014. These categories are:

  • Eligible job-holders
  • Non-eligible job-holders, and;
  • Entitled workers

This assessment is subject to the overriding considerations of what to do with workers who may already be in a pension scheme run by you.

You will need to consider what contribution rates you will pay for each of these categories and decide what definition of earnings you will apply. Remember that if you choose not to follow the statutory definitions of qualifying earnings for any of the categories, you will need to certify the contributions basis you will use.

Postponement

You may postpone auto enrolment for up to three months to assist the burden of commencing the scheme, but also to allow for seasonal changes such as if you employ temporary workers. However, this option can only be used in limited circumstances:

  • On the employer’s staging date for any employees currently employed,
  • On the first day of employment, for employees who commence employment after the employer’s staging date, and
  • On the date a worker becomes an eligible jobholder, perhaps due to promotion or wage rise, after the employer’s staging date.
     

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