Compulsory pensions - Who's in?

  • by Carole Jordan
  • 11 Oct, 2016

I’m getting a lot of questions from business owners who are starting their auto-enrolment journey. The first thing they need to know is whom of my staff do I need to include in the pension scheme. This is an important question because it affects your costs and its important to budget for the increased cost well in advance.

Here’s a table from the Pensions Regulator that sets this out nicely.

How to assess staff based on their ages and how much they earn?

1: Has a right to join a pension scheme
If they ask, the employer must provide a pension scheme for them, but the employer doesn’t have to pay contributions into a pension scheme.

2: Has a right to opt in
If they ask to be put into a pension scheme, the employer must put them in a pension scheme that can be used for automatic enrolment and pay regular contributions.

3: Must be enrolled
The employer must put these members of staff into a pension scheme that can be used for automatic enrolment and pay regular contributions. The employer doesn't need to ask their permission. If a member of staff gives notice, or the employer gives them notice, to leave employment before the employer has completed this process, the employer has a choice whether to enrol them or not. The employer also has a choice whether to enrol a director who meets these age and earnings criteria.

Thinking about this begs the question: What should I tell my employees?

The Pension Regulators website has templates for you to use for various circumstances. 

You are not obliged to write to your staff until you have completed the enrolment but letters in advance of this will generate more goodwill toward you as an employer so I would recommend you communicate with your employees about this well in advance and write to them some weeks before the date the scheme takes effect.

If you need help with this turn to your payroll provider or your accountant. Contact us if you would like comprehensive help to implement your auto-enrolment scheme and ensure you benefit from this new initiative.

You can contact us via email at: info@businessheads.co.uk or give us a call on: 01273 882200.

All details above were correct at the time of publishing - for more up to date information please get in touch .

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