Practice Advice

Auto-Enrolment Pensions

Find out how Auto Enrolment works and what you need to do to comply. Also check out our calculator to see how much you and your employees have to contribute.

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Practice Advice

Complying with Auto-Enrolment

Automatic enrolment, or auto-enrolment, is a government initiative that requires employers to put qualifying staff into a workplace pension scheme and ensure mandatory contributions are made. 

It was first introduced for the largest employers from October 2012, before being gradually extended to all employers by 1 February 2018. 

The idea was to increase pension participation among employees – and it’s certainly made a difference, having brought more than 10 million people into workplace pension schemes as of February 2019. 

If your business employs staff who earn more than £10,000 a year and are between the ages of 22 and state pension age, they qualify for auto-enrolment.  

This means you’re required by law to enrol them into a workplace pension scheme and make contributions at a minimum rate. Your employee will also need to contribute towards the scheme. 

Any businesses that fail to comply with these rules could risk receiving a £400 fixed penalty from The Pensions Regulator, or escalating daily fines from £50 up to £10,000.

Setting up a scheme

If you’re employing staff for the first time, your auto-enrolment duties will begin on the day your first employee starts work.  

You’ll need to choose a pension scheme that’s set up for auto-enrolment, enrol qualifying staff in it, write to those members of staff to explain how auto-enrolment applies to them, and send a declaration of compliance form to The Pensions Regulator. 

You then need to make contributions that meet a minimum rate, as a percentage of the employee’s qualifying earnings. In 2019/20, these are their annual earnings that fall between £6,136 and £50,000. 

Staying compliant

Your auto-enrolment duties don’t end with setting up a scheme.  

There are other ongoing responsibilities to consider, including checking the ages and earnings of your staff to see whether or not they qualify, dealing with requests to leave or join the pension scheme, and keeping records.

You’re also required to re-enrol eligible workers who are not part of a scheme every three years, and re-declare your compliance to The Pensions Regulator at the same time.

Auto Enrolment Pension Advice

What do i need to comply?

Digital Record Keeping

It’s compulsory for you to keep a digital record of your business’ name and an address, which is the principal place of business.

Your business’ VAT-registration number and a record of any accounting schemes used must also be recorded digitally.

For each supply your business receives, you need to record the time of supply, the value of supply (including any VAT that cannot be reclaimed), and the amount of input tax to be claimed.If there is more than one supply on an invoice, the totals from the invoice can be recorded.

For each supply made by your business, you must record the time it was supplied, how much it was worth at the time and the rate of VAT charged. Multiple supplies made at the same time don’t need to be recorded separately.

Compatible Software

There are a range of different ‘Functional compatible software’ available including Online Book-keeping Software, Excel Bridge Software, Online VAT Submission Software and Accountant specific Software.

They must be capable of recording and preserving records in an electronic form, providing information and returns from the records to HMRC in an electronic form using the API platform and receiving information from HMRC

It’s possible to mix and match software – the complete set of digital records needed for MTD for VAT don’t need to be held in one piece of software.

As long as there is a link between the different pieces of software, the records can be held in a range of acceptable digital formats.

Online VAT Submissions

The VAT return is calculated from the digital records maintained in the functional compatible software, and a business will need to confirm the return is correct before sending it to HMRC.

Once submitted, confirmation the return has been received by HMRC will be received via the software, while VAT returns can be submitted by us on behalf of your business.

calculator

Find out what contributions you will have to make

The following minimum contribution rates apply as of 1 April 2019:

  • Employer contribution: 3%
  • Employee contribution: 5% (including government tax relief)
  • Combined employee/employer contribution: 8%

Use our calculator to work out how much you’ll need to pay towards an employee’s pension per year.

our solution

Looking for an Accountant who is Auto-Enrolment Ready?

If you are thinking about employing staff or know that you need to comply with Auto Enrolment then ask us about our fixed price package.

We can handle all compliance and management of your payroll saving you the time to focus on what really matters.

Contact US
Payroll & AE Package
FROM
£
102
P/M
Monthly Payroll and Auto Enrolment Pension Management and Compliance Service.
Payroll & AE Pension Scheme Setup
Monthly Payroll Run
Ongoing AE Assessment
E-Payslips
Employee Letters & Correspondence
Full Compliance with RTI & The Pensions Regulator
read more
Payroll & AE Package
FROM
£
85
P/M
Monthly Payroll and Auto Enrolment Pension Management and Compliance Service.
Payroll & AE Pension Scheme Setup
Monthly Payroll Run
Ongoing AE Assessment
E-Payslips
Employee Letters & Correspondence
Full Compliance with RTI & The Pensions Regulator
read more
Auto Enrolment

FAQS

Who needs to be enrolled?

Most workers in the UK are going to be automatically enrolled into a workplace pension scheme by their employer. From the date they’re automatically enrolled they’ll have a month to choose not to join, or ‘opt out’. If they do nothing they’ll be enrolled in the scheme. They’ll make contributions to their retirement pot from their pay for as long as they’re employed or until they take their money out.

Workers and employers can both contribute to build a retirement pot that’s invested on behalf of the worker. Workers who earn over a certain amount are entitled to a minimum contribution into their pot when they’re paid.

  • Eligible jobholder: Any staff member earning over £10,000 PA must be automatically enrolled into the pension scheme and both employer and employee contribute. If the staff member is below 22 or above the state pension age they have the choice to opt in or out.
  • Non-eligible jobholder: Any staff member earning between £6,032 to £10,000 PA  do not automatically need to be enrolled but the employer must provide the employee with information about the auto enrolment scheme, and if the employee chooses to opt in both the employer and employee contribute.
  • Worker without Qualifying Earnings:  Any staff member earning below £6,032 can ask to enrolled in the pension scheme. The employer has to write to employee to inform them of the pension scheme. If the employee chooses to opt in the employer does not have to contribute.
Auto-enrolment contribution rates 2018/19

Our table highlights what the different parties must contribute to auto-enrolment pensions.

Period Employer Minimum Contribution Staff Contribution Total Minimum Contribution
Until 5th April 2018 1% 1% 2%
6th April 2018 to 5th April 2019 2% 3% 5%
6th April 2019 Onwards 3% 5% 8%
What do I need to get in place?

It is an employer’s legal obligation to issue a statement of main terms within 2 months of an employee commencing employment – employers without contracts need to get them in place now. Statement of main terms needs to include the pension details. Policies need to include mention of pensions, rollout and communication process, including opt-out procedures.

Can I delay enrolment for a probationary period?

You are able to delay a new employee going into the scheme during a three month probationary period. Remember, that if you do this you must have documented it clearly.  Note that whatever the length of the probation period, workers should be enrolled after three months.

Can I opt out of AE if my payroll is just for the directors?

If your payroll is simply for Directors and you all chose to opt out you are able to communicate with The Pensions Regulator and advise them immediately. This is normally accepted by them in the form of an email but you will require the reference number on your Pension Regulator letter. It does also mean that you will not have to source a Pension Provider.

Find out how much April's rise in Auto Enrolment Contributions will cost your business

Regardless of the size of your business and who gets paid, if you have a PAYE scheme in place you will have a Pension Staging date. It is as simple as that. Even if it is simply a payroll for Directors only - it still applies and you still need to do something about it. You will receive, or already have, a letter from the Pensions Regulator.

Regardless of the size of your business and who gets paid, if you have a PAYE scheme in place you will have a Pension Staging date. It is as simple as that. Even if it is simply a payroll for Directors only - it still applies and you still need to do something about it. You will receive, or already have, a letter from the Pensions Regulator.

Do not ignore it as there are no acceptable excuses - You will be fined heavily and could even face prosecution!

Automatic ENrolment Compliance

What do i need to comply?

Find a Provider

Identify a Pension provider as soon as possible. And remember that a lot of the pension companies are overwhelmed and are not accepting smaller companies into their schemes. You may have to choose some of the “capture all” pension providers like, among others, Simply Pensions, Now Pensions, Nest, Peoples Pensions, etc. Make sure you shop around for the best deals for your employees and get independent  advice if need be.If you have employees, you must check your workforce status. Gather together all their details like name, date of birth, hours, salary, etc. Make sure all your employees records are up to  date.

Evaluate & Enrol Employees

Identify your employee’s eligibility, it is  based on age and earnings – and beware. Eligibility can change at each pay period as age changes and earnings can too!

Submissions & Ongoing Evaluation

The VAT return is calculated from the digital records maintained in the functional compatible software, and a business will need to confirm the return is correct before sending it to HMRC.

Rates

Auto Enrolment

About Us
Auto-enrolment contribution rates 2018/19

Our table highlights what the different parties must contribute to auto-enrolment pensions.

Period Employer Minimum Contribution Staff Contribution Total Minimum Contribution
Until 5th April 2018 1% 1% 2%
6th April 2018 to 5th April 2019 2% 3% 5%
6th April 2019 Onwards 3% 5% 8%

AE & Payroll Package

Although the Making Tax Digital (MTD) regime has suffered several setbacks and delays, MTD for VAT remains on course to take effect from its planned implementation date of 1 April 2019.

Under the scheme, VAT-registered businesses are required to maintain digital records,complete the VAT return from the digital records and send it electronically to HMRC.

Our Solutions
Payroll & AE Package
FROM
£
102
P/M
Monthly Payroll and Auto Enrolment Pension Management and Compliance Service.
read more
Payroll & AE Package
FROM
£
85
P/M
Monthly Payroll and Auto Enrolment Pension Management and Compliance Service.
read more
Frequently Asked Questions

Auto ENROLLMENT Pensions FAQS

What do I need to get in place?

It is an employer’s legal obligation to issue a statement of main terms within 2 months of an employee commencing employment – employers without contracts need to get them in place now. Statement of main terms needs to include the pension details. Policies need to include mention of pensions, rollout and communication process, including opt-out procedures.

Who needs to be enrolled?

Most workers in the UK are going to be automatically enrolled into a workplace pension scheme by their employer. From the date they’re automatically enrolled they’ll have a month to choose not to join, or ‘opt out’. If they do nothing they’ll be enrolled in the scheme. They’ll make contributions to their retirement pot from their pay for as long as they’re employed or until they take their money out.Workers and employers can both contribute into NEST to build a retirement pot that’s invested on behalf of the worker. Workers who earn over a certain amount are entitled to a minimum contribution into their pot when they’re paid.

  • Eligible jobholder: Any staff member earning over £10,000 PA must be automatically enrolled into the pension scheme and both employer and employee contribute. If the staff member is below 22 or above the state pension age they have the choice to opt in or out.
  • Non-eligible jobholder: Any staff member earning between £6,032 to £10,000 PA  do not automatically need to be enrolled but the employer must provide the employee with information about the auto enrolment scheme, and if the employee chooses to opt in both the employer and employee contribute.
  • Worker without Qualifying Earnings:  Any staff member earning below £6,032 can ask to enrolled in the pension scheme. The employer has to write to employee to inform them of the pension scheme. If the employee chooses to opt in the employer does not have to contribute.
Can I delay enrolment for a probationary period?

You are able to delay a new employee going into the scheme during a three month probationary period. Remember, that if you do this you must have documented it clearly.  Note that whatever the length of the probation period, workers should be enrolled after three months.

Can I opt out of AE if my payroll is just for the directors?

If your payroll is simply for Directors and you all chose to opt out you are able to communicate with The Pensions Regulator and advise them immediately. This is normally accepted by them in the form of an email but you will require the reference number on your Pension Regulator letter. It does also mean that you will not have to source a Pension Provider.

if you are Unsure on any matter then
please get in touch

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