Auto enrolment update
Thursday 23 November 2017
By Halinka Rands, Payroll Team Leader, Equiom Scotland
There are a number of developments in auto enrolment for employee pensions. Detailed below are some of the changes, how they may affect employers and employees and any action you need to take.
Increase in automatic enrolment contributions
Minimum contributions into automatic enrolment pension schemes are increasing for both employers and employees from 6 April 2018. There will be a further increase in contributions from 6 April 2019.
All employers with employees in an automatic enrolment pension scheme or an existing qualifying pension scheme must ensure that at least the minimum amounts are being paid into the pension schemes.
If you are already paying above the increased amounts or do not have any employees in your pension scheme, you do not need to take any action.
The new minimum contributions are a legal requirement – as an employer, your minimum contribution will be 2% from 6 April 2018 to 5 April 2019 and 3% from 6 April 2019. The total minimum contribution from 6 April 2018 to 5 April 2019 will be 5% which means that your employee will need to contribute a minimum of 3% if you as the employer, are contributing the minimum of 2%.
From 6 April 2019, the total minimum contribution will be 8% - your employee will need to make a minimum contribution of 5% if you are making a minimum employer contribution of 3%.
Employer minimum contribution Employee contribution Minimum contribution
Until 05/04/17 1% 1% 2%
06/04/18 - 05/04/19 2% 3% 5%
06/04/19 3% 5% 8%
The actual employee contribution rate may vary depending on the type of tax relief applied by your scheme.
If Equiom Scotland are administering your auto enrolment scheme, we will ensure that the correct contributions are applied from both 6 April 2018 and 6 April 2019.
If you are administering your own scheme and require assistance, contact your auto enrolment pension scheme provider.
Learn more about auto enrolment contributions.
Auto enrolment staging dates
An employer’s staging date for auto enrolment was originally set by the The Pensions Regulator (TPR) from Pay As You Earn (PAYE) data held by HM Revenue and Customs as at 1 April 2012.
Where businesses were set up after 1 April 2012, the TPR set staging dates apply as per the below:
Between 01/04/12 - 31/03/13 01/05/17
Between 01/04/13 - 31/03/14 01/07/17
Between 01/04/14 - 31/03/15 01/08/17
Between 01/04/15 - 31/12/15 01/10/17
Between 01/01/16 - 30/09/16 01/11/17
Between 01/10/16 - 30/06/17 01/01/18
Between 01/07/17 - 30/09/17 01/02/18
New employers after 1 October 2017 do not have a set staging date. They must contact TPR directly to advise who should be their point of contact for automatic enrolment and establish when their ‘employer duties’ should commence.
Every three years, an employer must re-enrol certain employees into a pension scheme that can be used for auto enrolment. Whether or not they have any staff to re-enrol, employers are required to complete a re-declaration of compliance. This must be completed within 5 months of the third anniversary of the date legal duties commenced. i.e. for an employer who staged on 1 October 2015, the re-declaration must be completed by 28 February 2018.
Here are the steps you need to take as an employer:
- Choose a re-enrolment date – this should fall anywhere within a 6 month time frame, which commences 3 months before the third anniversary of the date their legal duties started and 3 months after it. i.e. for an employer who staged on 1 October 2015, the re-enrolment time frame spans 1 July 2018 to 31 December 2018
- Identify ‘eligible’ staff (essentially those who have opted out of automatic enrolment)
- Re-enrol the eligible staff with effect from the chosen re-enrolment date and notify them (postponement cannot be used on any employees who need to be re-enrolled)
- Complete the re-declaration of compliance and submit to the Pensions Regulator
Employers should begin the above process immediately to ensure the required deadlines are met.
Auto enrolment compliance
TPR issued a press release on 13 November 2017 publishing its latest compliance and enforcement bulletin. Between July and September 2017, 753 employers received ‘Unpaid Contributions Notices’ – the Notices require employers to ensure that all backdated contributions are paid within 28 days.
TPR actively supports employers who contact them to ensure that they are aware of their responsibilities, key dates and deadlines which must be observed, but they also exercise their powers of enforcement and breaches in the event of non-compliance.
Find out more about this topic.
If you require any support with the above topics please contact Equiom Scotland's Payroll team