Auto-enrolment is in the news this month, after the final rise in minimum contributions kicked in for both employees and employers on 6 April 2019.
It marks the end of the line for the first phase of auto-enrolment, which has seen more than 10 million people saving into a workplace pension.
Extending auto-enrolment to the self-employed, raising minimum contributions again, or lowering the age an employee can be enrolled, are all options that could be in the pipeline.
But for now, employers have their hands full trying to comply with the latest increases and their re-enrolment responsibilities.
Auto-enrolment in 2019/20
If you run a business and pay employees aged between 22 and state pension age more than £10,000 a year, you should be familiar with auto-enrolment.
That’s because the next time you run payroll, your minimum employer contributions into eligible employees’ workplace pensions rises from 2% to 3%.
You or your accountant will also have to manage the change within payroll that sees those employees sacrifice at least 5% of their salary – up from 3%.
Auto-enrolment fines and penalties
Of course, both you and your employees can contribute more towards their workplace pensions – unless the increase sees them opt out.
Under no circumstances should you encourage an employee to opt out. They must make the decision freely and without influence from their employer.
A precedent was set last autumn when The Pensions Regulator issued a record £280,000 fine to a national recruitment agency.
The agency’s owner and a director received suspended prison sentences for plotting to illegally opt workers out of their pension scheme.
The re-enrolment process is a three-year cycle for businesses that operate workplace pension schemes.
First, you need to choose a date to re-enrol your employees. You can pick any date in a six-month window either side of the third anniversary of your staging date.
As a reminder, staging dates are when your first auto-enrolment responsibilities came into force, sometime between October 2012 and 1 February 2018.
Then you need to work out which employees you need to re-enrol into your workplace pension scheme, including anyone who has opted out.
The final step to take is to re-enrol these employees and re-declare your compliance with The Pensions Regulator.
Get in touch
If you need help or are looking to outsource payroll, including all auto-enrolment responsibilities to keep you compliant, we can certainly help.
Speak to one of our advisers by calling 0141 221 257 or email us at firstname.lastname@example.org to find out how we can help.