Auto-enrolment: Are we there yet?

Is auto-enrolment still relevant to employers? 

Yes it is. By February 2018, all employers in the UK will be required to auto-enrol their eligible jobholders in a pension scheme that meets certain specific requirements, unless the jobholder is already an active member of their employer’s qualifying pension scheme or is exempt. The obligation is on the employer to auto-enrol the eligible jobholder. 

When this obligation arises will depend on the employer’s “staging date”. Employers with fewer than 50 workers (as opposed to eligible jobholders) have been given staging dates between 1 June 2015 and 1 April 2017. New businesses (those started after 1 April 2012 but before 30 September 2017) have a bit more time but will have a staging date of no later than February 2018. It is therefore important to understand who a “worker” is for the purposes of your staging date.

How does this concern me as an employer?

Once you have reached your staging date, you have six weeks within which to auto-enrol your eligible jobholders. The Pensions Regulator can impose a range of penalties on an employer that fails to comply with its obligations. For organisations, the penalties could be as much as £50k and for individuals £5k, so it is important that you get it right.

In addition to this, once you have passed your staging date and complied with the auto-enrolment requirement you must make regular assessments of whether your workers are eligible for auto-enrolment or of their right to opt into a scheme.

So what do employers need to do?

The following check-list may be useful:

• If you have not already done so, establish your staging date. 
• Review your existing pension arrangements as your pension scheme may already be a qualifying scheme for auto-enrolment purposes. Active members of a qualifying scheme do not have to be auto-enrolled.
• If your existing pension scheme is not a qualifying scheme, then it may be possible to vary it so that it becomes a qualifying scheme. However, varying your existing pension provisions may trigger an obligation to consult with the affected members of the pension scheme, so this needs to be factored into the overall timetable.
• Provide the required information to your eligible jobholders within the required timescale and enrol those eligible jobholders. This will also need to be factored into your timetable.
• Put systems in place to monitor ongoing compliance and re-enrolment of eligible jobholders.
• If your business is undergoing a re-organisation or corporate transaction, be aware that this may trigger fresh staging date requirements.

If you have any questions or want to know more about auto-enrolment contact Gino Rocco, Partner and Head of Pensions.