Auto-enrolment is a hot potato for smaller businesses with the mandatory staging date looming. It is wellworth taking advice on your staging date, the status of your employees and your obligations. The rules are complex with regard to employees who are “entitled” and “eligible” so that the rules, together with the HR aspect of implementing a pension scheme, preparation is absolutely key.
You should always check with your financial adviser or refer to the Pensions Regulator if unsure.
The Pensions Regulator guide to auto-enrolment
The new employer duties are being implemented month by month over a five-and-a-half-year staging period that started on 1 October 2012. Larger employers’ staging dates passed first and the rest follow on according to size with the bulk of all SMEs falling at the end of the process.
It is possible to bring forward your staging date to avoid the rush.
Once you hit your staging date, you will be required to automatically enrol an eligible worker with effect from the date the worker becomes eligible, unless he is already an active member of your qualifying scheme – if you have one.
Once it your staging date has passed, you must regularly assess whether any of your workers are eligible for auto-enrolment or if they need to be told about their right to opt into a scheme.
If you employ an eligible worker who is auto-enrolled (and does not opt out) you must pay mandatory minimum contributions to a defined contribution (DC) scheme or offer a minimum level of benefits in a defined benefit (DB) scheme.
Of note is that eligible workers who have opted out will be automatically re-enrolled every three years.
There are detailed provision-of-information requirements that employers need to comply with.