Rosie Smith | Marketing Specialist

Auto-enrolment and your business

What will automatic enrolment mean for you and your

business?

• The basics

• The process

• what will happen to you and your business

• what your business will need to do

• The pension

• Who qualifies?

• How much will it cost?

• Questions

The basic facts

There are a few key things that you really need to know

about:

• Your staging date This is the date that your AE obligations apply from

• Your Pensions Regulator ID codeWhen TPR writes to you, this code will be included on each letter

• You can postponeThis means you can put your staging date back by up to 3 months, but you must tell your employees you are doing so

• You must have a qualifying pension scheme availableEven if none of your employees qualify for AE, they may want to opt in to your workplace pension scheme

What will happen to your business

• Your staging date has already been worked outIt is based on the number of employees in your largest PAYE scheme on 1 April 2012

• The Pensions Regulator will write to you 12 months and

3 months ahead of your staging dateThese letters will include your ID code; you will need to keep this safe so you can register with TPR

• If you don’t comply with the regulation, you could face

finesThere is a fixed fine of £400, as well as daily fines based on the size of the business

1. Find a suitable pension scheme and register with itThere are several schemes set up to take low-wage earners including NEST, NOW:Pensions and The People’s Pension

2. Assess all your workers on your staging date

3. Automatically enrol your qualifying workers

4. Tell all your workers what you’ve doneYou can also tell your workers what you’re going to do in advance, but you must let them know what their AE category is once they’ve been assessed

5. Register with the Pensions RegulatorYou must register with TPR within four months of your staging date even if none of your employees qualify for AE

6. Accept anyone who wants to opt in to the pension

schemeYou will also have to be aware of workers opting out, though you shouldn’t be involved in this process

7. Continue to monitor all of your employees in case their

status changes

8. Reassess all workers every three years

What you need to do

Who qualifies for auto enrolment?

Employees will be broken down into four categories by age

and earnings

Only Eligible Jobholders must be automatically enrolled.

They also have the option to opt-out of the pension

scheme.

You have different responsibilities to the other types of

worker.

Your obligations to your employees

You have an auto enrolment obligation to all of your

employees except for those outside the legislation. Each

category of worker has slightly different entitlements:

Because of your different obligations to the different types of worker, you must continue to monitor all workers.

HOWEVER – An Eligible Jobholder’s AE rights cannot be taken away from them if they are part of your pension!

How much will it all cost?

There are two ways to calculate pension contributions:

1. Banded EarningsBanded Earnings are based on current tax bands. A pension

contribution based on banded earnings will be calculated

from the earnings between the Lower Earnings Limit

(currently £5,668) and the Upper Earnings Limit (currently

£41,450)

2. “First Pound” earnings“First Pound” earnings are what they sound like – the

earnings from the first pound of the employee’s salary. A

pension contribution based on “First Pound” will be calculated

from the employee’s total earnings

Some AE pension schemes (such as NEST) have an annual

contribution limit, so “First Pound” may not be suitable.

Certain things such as salary sacrifice schemes may also

affect pensions contributions.

Your contributions

Pension contributions will be increasing over the next 5

years.

The month to month costs

These figures are based on current National Insurance limits. They may be subject to change over the next three years.

Questions

Contact us

Tel: 0203 137 4402

Email: rsmith@enable.ltd.uk

Write to: PO Box 988Brighton BN1 3NT

Visit: www.enable.ltd.uk