Auto enrolment: am I legally compliant?
As an employer, there are a few key things you must do to make sure that your workplace pension scheme is compliant with auto enrolment legislation. Failure to comply can result in some hefty fines from The Pensions Regulator, so it’s important to make sure that you stay on track.
Not sure where to start? We’ve put together this straightforward guide to give you all the information you need to know.
What you need to do
Set up a workplace pension
You must have a workplace pension scheme in place by your duties start date that meets the auto enrolment criteria. (Your duties start date is the day your first member of staff joined the company – you cannot change this date.) Eligible employees are those who are at least 22 years old (but under State Pension age), earn more than £10,000 a year and work in the UK.
If you already have a pension scheme in place, this might be suitable for auto enrolment. Just make sure it meets the following conditions:
- It must have a suitable default investment scheme that all employees’ pension contributions will be invested in, unless they decide that they want to choose their own investment options
- The pension provider/trustees agree that the existing pension scheme can be used for auto enrolment
- The level of pension contributions that you and your employees contribute to the pension scheme must meet the minimum levels for auto enrolment
- All employees who meet the auto enrolment criteria must be enrolled onto the pension scheme
Send regulatory communications to your workforce
There are certain regulatory communications that you need to send to your employees to make sure they’re fully informed about auto enrolment. You can send them via letter or email – just make sure that they include the following information:
- When your workplace pension scheme will be available for them to join
- The key features of your chosen workplace pension scheme
- Who will be auto-enrolled, and who can choose to join the pension scheme or to opt-out
- How they can opt out if they choose to leave the pension scheme
Any compliance software you use may be able to help you with this
Declare your compliance
You’ll need to let The Pensions Regulator know that you have a compliant workplace pension scheme in place. To do this, you’ll have to complete a declaration of compliance within five months of your duties start date. You or someone on your behalf – like a financial adviser – can complete this.
If you don’t complete a declaration of compliance, The Pensions Regulator won’t consider your auto enrolment duties to be fulfilled, and you could be fined.
Perform your auto enrolment duties
Once your workplace pension scheme is up and running, you’ll still have ongoing auto enrolment duties. To stay compliant, you’ll need to:
- Assess your staff each time they’re paid to see if any additional employees need to be auto-enrolled. This is so that you can make sure all eligible employees are enrolled onto your pension scheme. An employee’s earnings may have increased, for instance, or they’ve had their 22nd birthday since they were last paid meaning they’re now eligible to be auto-enrolled.
- Establish membership for your eligible jobholders and anyone else who’s asked to join
- Deal with employees who want to opt in or out of your scheme, or cease active membership
- Pay contributions as calculated each time you pay your staff
- Perform re-enrolment duties once every three years so that eligible jobholders who have left your pension scheme or stopped paying pension contributions can be put back onto the scheme.
What you can’t do
Encourage employees to leave your pension scheme
You must not in any way encourage employees to leave your pension scheme. This is known as inducement. Employees have the right to inform The Pensions Regulator if they feel like they’re being forced to leave a workplace pension scheme.
Close your workplace pension scheme
You can’t close your workplace pension scheme without having another workplace pension scheme in place – and the new scheme must be suitable for auto enrolment.
Find out more about auto enrolment
Auto enrolment doesn’t have to be challenging. We’ve got all the information you need to get up and running with your workplace pension scheme.