Workplace pensions – employer duties – part two

You may recall from our previous auto enrolment articles that we have examined the importance of addressing employer obligations.

Research by The Pensions Regulator (TPR) still shows that employers do not know the exact date that they need to comply with the law introduced by the government.

If you are an employer with between 50 and 249 employees you have a deadline date allocated which will occur between 1 April 2014 and 1 April 2015. The latter is the final date by when you must have automatically enrolled all eligible job holders into your chosen pension scheme. You can confirm this date directly from www.thepensionsregulator.gov.uk

You do have the option of bringing this date forward or deferring it for up to three months, but should note that planning is crucial and leave sufficient time to fulfil your duties. Typically, TPR recommends between six and 12 months to allow for planning and implementation of the scheme, including communications with staff.

All employees will need to be automatically enrolled unless:

• They are already in a qualifying workplace pension scheme
• They are under the age of 22
• They are over the State Pension age, or;
• They earn less than £10,000 per annum (in 2014/15)

All contributions into the qualifying pension scheme are based upon what TPR states are qualifying earnings. This is classified as a band of earnings of more than £5,772 and £41,865 or less, based upon 2014/15 figures. These can include basic pay, bonuses, overtime, commissions and certain statutory benefits such as sick pay. The minimum contribution is 2%, but from 2018 this must be 8% per annum including employee contributions and tax relief.

Of course, the correct systems and processes are essential to be able to deduct contributions from salary and pay into your chosen pension scheme. In addition, each time you run payroll you are required to re-analyse your workforce to check for new eligible job holders.

When thinking about a pension scheme it is worth noting that even if you already have a scheme in place, it should be assessed to ensure it meets with the qualifying criteria. You should also check the ongoing costs associated with the scheme to ensure they remain within the Department of Work and Pensions charge cap of 0.75% per annum.