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Pensions Auto-enrolment
Pensions Auto-enrolment

This article will guide you through your obligations as an employer with respect to pensions auto enrollment

Sarah Woolven avatar
Written by Sarah Woolven
Updated over a week ago

What is auto enrolment?

Pensions auto-enrollment is a government initiative introduced to help more people save for later life through a pension scheme at work.

Every employer in the UK must put certain staff into a pension scheme and contribute towards it. This is called 'automatic enrollment'.

If an employee is eligible, the employer must automatically enroll them into a workplace pension scheme.

Employers and employees both contribute to the scheme through payroll deductions increasing the employees pension pot.

Once employees are enrolled, and assuming they do not opt out, employers and employees both contribute to the scheme through payroll deductions increasing the employees pension pot.

Minimum contributions are currently set at 8% of qualifying earnings with at least 3% coming from the employer.

Qualifying earnings thresholds are currently set to earnings between £520 and £4,189 /month.

Exemptions

Single directors: A single person company with a sole director will not need to complete a declaration of compliance and should tell the pensions regulator they are not an employer.

Multiple directors:

If a director does not have an employment contract, they cannot be a worker and are therefore exempt from automatic enrolment.

This means that a company with one or more directors who do not have contracts of employment is not considered an employer if it does not have any staff other than the director(s).

The company will have no automatic enrolment duties and does not need to complete a declaration of compliance. In this case you should let the pensions regulator know that you're not an employer.

If however you do have other employees. you still have duties in respect of those other employees and are therefore considered an employer. If none of your employees meet the age and earnings criteria (see qualifying staff criteria below) for automatic enrollment, the company still has to complete a declaration of compliance.

If the company's circumstances change so that automatic enrolment duties apply, you'll need to inform us of this as soon as possible. For example if you took on a member of staff other than a director, or if at least two directors started working for you under contracts of employment.

Qualifying staff criteria

In the UK, auto-enrolment regulations state that employers need to enrol qualified staff who normally work in the UK into a qualifying pension scheme. You could be fined if you fail to enrol qualified staff within 3 months of them starting with the company.

Employers must automatically enroll staff who are:

  1. Earning at least £833 per month

  2. Between the age of 22 and state pension age

  3. Normally work in the UK

Setting up a workplace pension:

  1. Select a pension scheme (Nest works best with Ember and we can only provide support with this scheme, but please see advice from the regulator here on choosing a scheme)

  2. Go to their website and set up your pension scheme

  3. See to it that eligible employees are opted into your pension scheme

  4. Make a declaration of compliance with the regulator

  5. Once set up - please make us aware by contacting [email protected] so that we can reflect this in your payroll

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