Auto enrolment can seem complicated – especially if you’re new to the world of workplace pensions. But it doesn’t need to be a challenge. We’ve created this simple eight-step guide to help you navigate auto enrolment, explaining what you need to do and when, from setting up the scheme to your duties start date and beyond.
When? As soon as possible
The first thing you need to do is work out when your workplace pension scheme needs to start.
- If you’re a new employer, your workplace pension needs to start on the same date as your first employment contract. You’ll need to have your scheme in place on that date. You’ll also need to look at your workforce to see who you need to enrol into the scheme.
- As soon as you know you’re going to have auto enrolment duties, you can nominate a contact with the Pensions Regulator. They will then send you emails to guide you in meeting your duties on time.
On this date, you’ll need to have a workplace pension scheme in place. You’ll also need to assess your workforce to see who you need to enrol into the scheme.
As part of step one, you’ll also need to confirm an employer contact with The Pensions Regulator. The Pensions Regulator is the UK regulator of workplace pension schemes. It works with trustees, employers, pensions specialists and business advisers, giving them guidance on what’s expected as part of auto enrolment This should be the owner or most senior person in your business, as it’s their responsibility to make sure you comply with auto enrolment.
Set up your workplace pension scheme
When? Ideally, two months before your duties start date.
As part of preparing for your auto enrolment duties, you’ll need to make some important decisions and apply for your workplace pension scheme. You’ll need to think about:
- How much you’ll contribute
- Whether your payroll provider will help you with auto enrolment
- Who’ll run your scheme day to day
You’ll also need to get a quote and apply for your company pension at this stage. When you are ready to move forward you can get a quote for our Aviva Workplace Pension here.
When you choose your payroll software, think about what you want it to do for you. To be compliant with auto enrolment legislation, it needs to be able to assess your workforce, calculate contributions, send communications to your employees and keep records. Having software with the functionality to complete all of these tasks will save you a lot of time in the long run.
Assess your workforce
When? On your duties start date.
To meet your auto enrolment duties, you need to assess your workforce so you know who’s eligible for your workplace pension scheme.
- Assess your workforce
- Using postponement
Assess your workforce
To do this, you’ll need to be certain how much each member of staff earns and how old they are. The table below shows the three different categories your employees might fall into, and what your responsibilities are for each. The details shown below are for the tax year 2020/2021.
|16 to 21||22 to state pension age||State pension age to 74|
|£6,240 and below||Entitled worker |
Must be enrolled if they ask. You’re not obliged to contribute to their pension pot, but you can if you would like to.
|Over £6,240 but no more than £10,000||Non-eligible jobholder |
Must be enrolled if they ask, and you must contribute to their pension pot.
|£10,000 and over||Non-eligible jobholder||Eligible jobholder |
Must be auto-enrolled, and you must contribute to their pension pot.
You can put off assessing some or all of your workforce for a period of up to three months. This is known as postponement.
Your duties start date doesn’t change if you use postponement. It simply means you’re choosing a slightly later date to assess their age or earnings. You might choose to use postponement if:
- You have staff on temporary contracts
- You have staff whose earnings fluctuate
- You require new starters to pass a probationary period – this must be no longer than three months
- You’d like to avoid having to calculate and pay pension contributions for part of a pay period
If you opt to use postponement, you’ll need to let your staff know and tell them how it will affect them.
Remember: If you employ short-term, zero-hour or other staff who aren’t on regular hours or incomes, you’ll still have to assess them each time you pay them.
Enrol staff onto your scheme
When? On your duties start date – or up to three months later if you’re using postponement.
Once you know which auto enrolment definition each member of your workforce falls into, it’s time to enrol all eligible employees into your pension scheme. Under auto enrolment regulations, staff members are split into three categories: eligible jobholders, non-eligible jobholders, and entitled workers. Eligible jobholders must be auto-enrolled onto your pension scheme, while staff in the other categories can ask to join your scheme, but don’t have to be auto-enrolled.
- What to do
- Making contributions
What to do
Any employees that you assessed as being eligible jobholders will need to be auto-enrolled into your workplace pension – and with Aviva, this step is easy. All you need to do is upload a file using our online scheme management system, and that’s all there is to it. We’ll then enrol those employees into your pension scheme and send each of them a welcome pack.
Not sure how to do it? We’ll provide full support to show you how to do this after you’ve applied to set up your scheme.
Employees assessed as non-eligible jobholders or entitled workers don’t have to be auto-enrolled, but they can ask to join your scheme. You’ll need to write to them to explain this within six weeks of your duties start date. (See step five for more information.)
Every time you pay your staff, you’ll need to make contributions into the scheme for any eligible and non-eligible jobholders who are members of it. Eligible jobholders are members of staff who have to be auto-enrolled onto your pension scheme. You must contribute to their pension pot. Non-eligible jobholders only need to be enrolled onto your pension scheme if they ask. You must contribute to their pension pot when they’re part of your scheme. In most cases, your employees themselves will also have to contribute. You’ll also need to make sure that any contributions you've agreed to make for entitled workers or any other employees covered by contractual joining are paid.
You’ll need to work out how much both you and your employees need to contribute, then send this information to us using our online scheme management system. Again, we’ll provide full support and training to show you how to do this. If you use payroll software, it might calculate the correct contribution amounts for you.
Write to your staff
When? Within six weeks after your duties start date.
Once you’ve assessed your staff, you’re required by law to write to them each individually to explain how auto enrolment applies to them and provide details of your chosen workplace pension scheme.
You can do this by letter or email. If you use our workplace pension, you need to have done this before you send us your joiner information. This is important because it affects the date on which the opt-out window starts.
Your payroll provider might offer software that can produce this communication for you.
Declare your compliance
When? Within five months of your duties start date.
You must have completed a declaration of compliance form on The Pensions Regulator’s website no later than five months after your duties start date. This will let the regulator know how you’ve met your legal duties.
You could be fined if you don’t complete the declaration on time or the information you submit is incorrect.
For more information, visit The Pensions Regulator where you can view a checklist of all the information you need to hand, and where you can find them.
Perform your regular duties
When? Every time you pay your staff
Once your auto enrolment duties have started, they don’t stop. In fact, you’ll need to go through steps three to six for as long as you continue to employ people.
- Assess your staff (every pay period)
- Deal with employees who opt out of your scheme
- Making pension contributions
Assess your staff (every pay period)
Every time you pay an employee who you haven’t had to auto enrol before (including new staff), you’ll need to assess them – just like you did on your duties start date. If any employees are now classed as eligible jobholders, you’ll then need to either auto enrol them into your scheme or use postponement for them. Eligible jobholders are members of staff who have to be auto-enrolled onto your pension scheme. You must contribute to their pension pot.
Deal with employees who opt out of your scheme
If any of your staff who’ve been auto enrolled onto your scheme choose to leave it within one month of being enrolled, this is known as opting out.
Within one month of their request, you’ll need to remove them from your scheme, stop taking contributions from their pay, and arrange a full refund of what they’ve paid to date. If they ask to leave the scheme after this date then any payments already made will remain in the pension plan.
Making pension contributions
Every time you pay your staff, you’ll need to calculate how much to contribute for any eligible and non-eligible workers who are in your scheme.
Other tasks you’ll need to perform
As well as the regular tasks you’ll need to perform, there are a few extra activities you’ll need to keep on top of.
- Keep records – ongoing
- Re-certify – at least every 18 months
- Automatic re-enrolment – every three years
Keep records - ongoing
You’ll need to keep records of how you’ve met your legal duties, including:
- The names and addresses of those you’ve enrolled onto your pension scheme
- Records showing when money was paid into your pension scheme
- Records of any requests to join or leave your pension scheme
- Your pension scheme reference number
You’re required to record this information by law, and you must keep these records for six years. Requests to leave the pension scheme only need to be kept for four years.
Re-certify – at least every 18 months
If you’re calculating your pension contributions based on something other than qualifying earnings, you’ll need to complete a certificate at least every 18 months. Qualifying earnings refers to the portion of an employee’s earnings that you can use to calculate auto enrolment pension contributions. For the tax year 2020/2021, it’s all an employee’s earnings between £6,240 and £50,000. This is to tell The Pensions Regulator that you’re paying at least the minimum contribution levels required by law,
Automatic re-enrolment – every three years
Around each third anniversary of your last duties start date, you’ll need to repeat some of the duties you performed on it. This is known as automatic re-enrolment. In essence, it’s when you have to make sure any eligible jobholder who has previously opted out of your scheme is put back onto it. Eligible jobholders are members of staff who have to be auto-enrolled onto your pension scheme. You must contribute to their pension pot. A staff member can opt out of your pension scheme within a month of being enrolled. They must be refunded any pension contributions you’ve taken from their pay during this time.
Your default re-enrolment date is your duties start date plus three years. You can choose a date three months either side of the default date as your re-enrolment date. Once your chosen re-enrolment date arrives, you’ll need to reassess all of your affected employees and re-enrol the eligible jobholders within six weeks. The ability to set this date replaces postponement.