Automatic Enrolment FAQ

Automatic Enrolment FAQ:

  • What is Auto enrolment in a nutshell?

Auto enrolment is a new legal requirement for all employers to provide a pension that meets minimum standards by 2018 (it is being phased in from 2012 and dependent on the size of the employer)

All employees over the age of 22 and below state pension age, who work ordinarily in the UK, must be enrolled into a pension scheme as long as they earn over £9,440 (relevant as at 20/11/2013).

It is being introduced as the government feel that people are not saving enough for their retirement and the state pension alone is insufficient.

  • What is my staging date and what exactly does it mean?

Your staging date is the date the new duties come into force for your business.

If you know your PAYE reference you can use an online tool to find out your staging date:

http://www.thepensionsregulator.gov.uk/employers/tools/staging-date.aspx

If you are a client, we have a list of our companies staging dates so please email Darren@pomfrey.co.uk or call 01322 315755 to find out yours.

  • Is there any way around the need to comply with all the new employer duties?

No, The Pensions Regulator will check all companies to ensure they are fulfilling their duties and heavy penalties will be imposed for non-compliance (see below for penalties)

  • Do I still have to comply with the employer responsibilities if I have an existing pension plan?

Yes your employer duties still stand, we can discuss how you need to move forward if you have an existing pensions scheme in place.

  • What penalties will I incur for non-compliance?

Penalties are dependent on the size of the employer:

Number of people Daily penalty
1 – 4 £50
5 – 49 £500
  • Can I give cash incentives to employees to not use our pension scheme to reduce my own cost?

No, it is unlawful to provide incentives to workers to induce them to opt out or to threaten them in anyway with any consequences for not opting out of automatic enrolment.

  • How much will auto enrolment cost me as an employer?

Here is an example of how automatic enrolment will affect an employer based on having a salary of £25,000 per annum.

Employer contribution: £579.96

Staff member minimum contribution (including tax relief)

5%

£966.60

Total minimum contribution

8%

£1,546.56

This annual contribution of £579.96 made by the employer is an allowable expense.

  • I am sole director limited company, do I need to comply?

No, sole director limited companies do not need to comply with the new workplace pension laws.

  • What are the ongoing fees for having a workplace pension scheme in place?

Based on paying into a NEST pension scheme (more info to be found at http://www.nestpensions.org.uk/)

In addition to contributions paid into the pension scheme as detailed above:

Charges to the employer:
Nil

Charges to the employee:
1.8% of the amount paid into the pension pot
0.3% Annual management charge on the total fund.

  • Fees for Pomfrey setting up a qualifying pension scheme and ensuring ongoing compliance:

Our fees are dependent on the size of the payroll but for the vast majority will be under £1,000 per annum. If we currently run a monthly payroll for your company, we will be in touch in the coming months to discuss everything in much greater detail.