Understanding your pension responsibilities

All employers have an obligation to have an auto enrolment pension scheme if they have staff who meet the criteria to be auto-enrolled or if they choose to join.  Once you have a scheme you have ongoing duties which include:

• Monitoring the ages and earnings of all your staff 
• Communicating with your staff in writing within 6 weeks of enrolling them into the scheme
• Managing requests to leave or join the scheme or to vary contributions
• Keeping records of your scheme, the details of the employees in your scheme and the contributions for 6 years
• Paying the pension contributions into the scheme when they are due
• Completing re-enrolment every 3 years
• Completing re-declaration of compliance every 3 years

Pension auto-enrolment has become a standard task for those of us running payroll and we automatically assess every new employee's earnings to see if they meet the criteria for enrolment into the company scheme.  

Sometimes employees will ask for their pension contribution to be added to a pension scheme they currently hold but that scheme may not comply with the auto-enrolment requirements.  You should therefore take advice from an Independent Financial Advisor or The Pension Regulator to ensure you are complying with your employer responsibilities.  

Re-declaration of Compliance and Re-enrolment

One of the tasks that can be easily overlooked, if you don't have a reminder set or you don't receive the automatic reminder from The Pension Regulator, is completing your re-declaration of compliance every 3 years from the date of your initial staging date.

To be able to complete your re-declaration of compliance you will need to re-assess all your employees on the 3rd anniversary of your original staging date.  You will need to re-enrol anyone who opted out of your scheme more than 12 months ago if they meet the criteria for auto-enrolment.  If you do need to re-enrol anyone you must write to them within 6 weeks of re-enrolling them, just as you did originally.  Those employees, once re-enrolled, can opt out again and, as long as they do so within 1 month, they will have their contribution deduction refunded to them with their next pay.

It is important to budget for any additional costs which may occur because it may be that employees who opted out the first time may decide to stay in the scheme once they are re-enrolled.

Pension administration

There is a lot of administration involved in dealing with auto enrolment pension schemes, especially when there are a lot of employees, which is why we have always offered an administration service to our payroll clients. 

Keeping on top of the administration ensures the relevant communications are done on time, that employees are enrolled in a scheme when they reach 22 or when they reach the earnings threshold, and that new employees are enrolled as soon as their postponement period ends.  

Contact our payroll department if the administration of your payroll and pension scheme is becoming too time consuming - we can guarantee you will find it straightforward and efficient.