Auto-enrolment

I trust that by now if you have eligible employees you’ve got your workplace pension in place – or at least are making the arrangements in readiness for your staging date!

As you probably know, unless you are literally a one-man band, every business-owner has a legal obligation to carry out a full assessment of all staff on the staging date. You then have three months to auto-enrol all qualifying employees and you must also advise your workforce of their rights to opt out, opt in or request a pension without employer’s contributions. All of this is governed solely by their level of remuneration so long as they qualify.

If you’re congratulating yourself on having all this set up, then I’m delighted.  But do you realise that your legal obligation is ongoing and you should effectively re-assess at every payroll run?

If all your team are on regular salaries then you probably won’t have much of a problem and you’ll only have to carry out an assessment when you get new employees joining, or employees leaving, or on a salary review (and of course annually when, as I anticipate, the remuneration thresholds will change). But – do you give your staff bonuses (either seasonal or performance-related)?  If so, then every time you do so you’ll need to consider whether or not this has taken employees over the weekly or monthly remuneration thresholds.

Where the need for ongoing assessment will really be relevant is if you have employees who work irregular hours, either ‘as needed’ or on a fluctuating shift pattern.  This means that the first time an employee aged between 22 and state pension age earns over the automatic enrolment threshold (currently £192 a week or £833 per month) they must be enrolled. If they are outside that age-range, or meet the lower pay thresholds, they have a right to opt in. The three month deferment period refers to the first three months of their employment. Not three months after they first hit the threshold! Once an employee has been enrolled, you must go on paying the contributions into their pension scheme, unless the earnings fall below the threshold. However the rules of the pension scheme require you to continue (so do check this point).

And finally – don’t forget that the requirement to provide a workplace pension doesn’t just relate to businesses. If you pay anyone to provide services to you in your personal capacity, then if they meet the remuneration thresholds they are a qualifying employee and you must provide a workplace pension for them!