You may be aware by now that the law on workplace pensions has changed. Under the Pensions Act 2008, every employer in the UK must put certain staff into a pension scheme and contribute towards it. This is called ‘automatic enrolment’. If you employ at least one person you are an employer and you have certain legal duties.
The Pensions Regulator have a great wizard program called “Duties Checker” that lets you input your business information and it will tell you exactly what you need to do as per your business situation. You will require the following information to use the Duties Checker:
Your PAYE Reference can be found on the letter you received from us about automatic enrolment. You can also find it on your letter from HMRC when you first registered as an employer, or from your payroll software.
Your letter code is the 10 digit code on the letter you received from us about automatic enrolment.
If you don’t know your letter code you can find it here.
Age and earnings
You’ll need to know the age and approximate earnings of anyone you employ.
You can use the Duties Checker here by following this link: http://www.thepensionsregulator.gov.uk/en/employers/duties-checker.aspx
Employees who qualify for a workplace pension
You must enrol and make an employer’s contribution for all staff who:
- are aged between 22 and the State Pension age
- earn at least £10,000 a year
- work in the UK
How much you must pay
You must pay at least 1% of your employee’s ‘qualifying earnings’ into your workplace pension. This will rise to 3% in 2019 if approved by Parliament.
You can work out ‘qualifying earnings’ as either:
- the amount an employee earns before tax between £5,824 and £43,000 a year
- their entire salary or wages before tax
The amount you must contribute to the pension scheme is determined by the scheme’s rules. However, if you’re using the scheme for automatic enrolment there are minimum contributions you must pay.
The minimum contributions that you must pay into your staff’s pension scheme are shown in the table below – they’re currently a total contribution of 2% with at least 1% employer contribution.
Minimum contributions are being introduced gradually over time. You will usually pay pension scheme contributions either as a fixed amount or based on a percentage of earnings.
|Employer minimum contribution
|Total minimum contribution
|Employer’s staging date to *05/04/18
|2% (including 1% staff contribution)
|*06/04/18 — *05/04/19
|5% (including 3% staff contribution)
|8% (including 5% staff contribution)
*The proposed dates are subject to Parliament approval
How to pay the contributions
You must deduct contributions from your staff’s pay each month. You’ll need to pay these into your staff pension scheme by the 22nd day (19th if you pay by cheque) of the next month.
You must pay your contributions for each employee by the date you’ve agreed with your provider.
What happens if I don’t comply?
There are certain duties you must comply with. If you fail to comply with your duties, we may take enforcement action and issue a notice and / or a penalty.
- The responsibility for complying with the employer duties rests with the employer.
- If you don’t comply, you’ll face enforcement action in line with our risk-based approach.
- Enforcement action starts with statutory notices and is followed by penalty notices.
- Further non compliance may result in court action.
If you have received a penalty notice, you can now pay your notice online.
Full information on enforcement can be viewed here: http://www.thepensionsregulator.gov.uk/en/employers/what-happens-if-i-dont-comply.aspx
This information has been sourced via the following links – for further details please click the links and read about your responsibilities.