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Re-enrolment duties must be completed approximately three years after your automatic enrolment staging date, some of our customers reached their re-enrolmentdates in 2017. On the re-enrolment date, employers must reassess certain staff for re-enrolment, you need to assess staff if:
- They opted out of the auto-enrolment workplace pensionscheme more than 12 months before the re-enrolment date
- They left the pension scheme under the scheme rules (known as “ceasing active membership”) more the 12 months before the re-enrolment date
- They are in the pension scheme but have reduced their contributions to below the level required for auto-enrolment
Re-enrolment is very important, to date it has largely gone under the public radar as the focus remains on enrolling those UK employers who are yet to reach their staging date through to early 2018. As UK legislation requires this process is to be completed every three years, it is vital to understand what is expected by both HM Revenue & Customs (HMRC) and The Pensions Regulator (TPR). Failure to comply with automatic re-enrolment and re-declaration of compliance duties and deadlines may result in fines. To succeed in the re-enrolment process, employers must familiarise themselves with their obligations and act early. There are some simple steps to follow:
- Choose your re-enrolment date that falls in the three months either side of the three year anniversary of the original staging date
- Assess your staff on the re-enrolment date
- Write to your staff that you have re-enrolled within 6 weeks of your re-enrolment date
- Complete your re-declaration of compliance within 5 months of the third anniversary of your staging date
By communicating proactively with your employees you can help them understand the benefits of pension entitlement and reduce the risk that they might lose sight of it in the future. The re-enrolment process is not straightforward, however, using payroll softwarethat handles the re-enrolment process, such as BrightPay, will greatly reduce the time required to remain compliant.
Written by Alena Amelyanchuk | BrightPay Payroll Software
What to consider when choosing the right pension scheme
Millions of employees are now enrolled into their company’s workplace pension schemes with more than 80,000 employers now approaching their automatic re-enrolment deadline. However, there are still a large number of small and micro companies approaching their initial staging date for automatic enrolment (AE).
Through correspondence sent by The Pensions Regulator, employers have been made aware of their staging date months before their auto enrolment responsibilities begin. This advanced notice is critical for smaller companies who are less likely to have a pension specialist to assist them with choosing the correct pension scheme for their employees. It is important to know that choosing a suitable workplace pension scheme takes time and is a decision that should not be rushed.
Key consideration must be given to ensure the pension scheme is commercially viable and clearly balanced between the products and added-value services offered to employees. When selecting an auto enrolment pension scheme, employers should also remember to look at what tax relief options the scheme offers.
Employees can receive tax relief from the government in two different ways – Relief at Source or Net Pay Arrangement. Pension providers may only offer one of these methods, whilst others may offer both. It is important employers choose a pension scheme that allows their employees to benefit the most from the tax relief method it offers. For example, pension schemes which operate tax relief at source are more suited to employees who are generally low paid, whilst pension schemes which operate net pay arrangement are likely to benefit higher paid employees more.
New Employers & Auto Enrolment
From 1st October, 2017, all new employers will have to complete their AE duties as soon as they employ staff. New employers will not have a staging date, instead, their legal obligations will commence on the first day that their first employee starts to work for them, which is known as the ‘duties start date’.
Fortunately for these new employers, there is still the option to postpone one or multiple employees for up to three months. Postponing employees will give new employers additional time to choose a suitable pension scheme and prepare for auto enrolment.
Are you due to re-enrol your employees?
Automatic re-enrolment takes place every three years whereby employers must re-enrol certain staff into an AE pension scheme if they’re not already active members of one. Employers need to assess certain staff on their re-enrolment date to see if they meet the age and earnings criteria to be re-enrolled.
- Choose a re-enrolment date that falls within a six month timeframe. This six month timeframe is three months before or three months after the three year anniversary of their original staging date. For example, a staging date of 1st June 2014 would mean an employer must choose a re-enrolment date between 1st March and 30th September 2017, regardless of whether or not postponement was originally used.
- Employers are not required to notify The Pensions Regulator (TPR) of their chosen automatic re-enrolment date until they complete their re-declaration of compliance.
- Employers must complete a re-declaration of compliance within five months of the third anniversary of their staging date or original duties starting date, whichever applies.
- Employers must identify certain eligible staff, re-enrol them on their chosen re-enrolment date and start contributing to their pension from that date.
- Write to the affected staff within six weeks of their chosen re-enrolment date informing them of what AE will mean to them.
- Ensure the contact details they provided to TPR are up-to-date so that they can be contacted regarding their re-enrolment duties. Details can be updated through the nominate a contact form.
When taking all of the above into consideration, employers must look beyond the obvious. Using a HMRC recognised, RTI automated and fully integrated payroll and auto enrolment system such as BrightPay will allow employers to streamline their payroll processes.
BrightPay payroll software is free for employers with 3 or less employees. The standard licence is only £99 (plus VAT per tax year) and includes unlimited employees. Both licences include full Automatic Enrolment functionality. Free email support is available for free licence holders and free email and phone support is available for standard licence holders.
Book a BrightPay Demo | Download a 60 day free trial
Written by Lorraine McEvoy, BrightPay Payroll Software
- Every employee will be forced to save into a workplace pension scheme, whether they want to or not.
FALSE! All employees have the right to opt out of the pension scheme. If they decide to opt out within a month of becoming a member they can get a refund of any contributions they have made during that time.
- Automatic Enrolment is not a payroll issue. It is another department’s issue.
FALSE! The person who processes the company’s payroll already has direct access to employees’ pay information which is essential in assessing employees for auto enrolment.
- Employees can choose to opt out of their automatic enrolment (AE) pension scheme permanently.
FALSE! While it is an employee's right to opt out, all employees must be assessed every three years and re-enrolled if they are eligible for auto enrolment. This process is known as automatic re-enrolment.
- Employers have the right to discourage their employees from saving into a workplace pension to save them money.
FALSE! Employers can face enforcement action from The Pensions Regulator if they are seen to be persuading their employees to opt out. TPR have rolled out spot checks across the country to ensure employers comply with their auto enrolment duties.
- Automatic Enrolment does not apply to employers with less than 5 employees.
FALSE! All employers with even one member of staff will have to assess and enrol all eligible employees into a recognised workplace pension scheme.
Written by Cailín Reilly | BrightPay Payroll Software
- Every employee will be forced to save into a workplace pension scheme, whether they want to or not.
For the first time ever, The Pensions Regulator (TPR) is launching a prosecution over allegations that a bus company and its managing director deliberately avoided enrolling staff into a workplace pension scheme.
The UK’s workplace pensions watchdog is accusing bus company Stotts Tours (Oldham) Limited of failing to comply with its legal obligations in relation to enrolling 36 members of staff in a pension scheme. This case will take place at Brighton Magistrates’ Court on 4 October 2017.
The Pensions Regulator has drawn up its compliance and enforcement strategy for pensions auto-enrolment. This sets out how it will enforce the auto-enrolment regime, using a system of statutory notices, fixed penalties and escalating fines.
Employers that intentionally fail to comply with key auto-enrolment or automatic re-enrolment duties or decline to enable staff to opt in to pension membership may be convicted of a criminal offence and subject to a fine and/or up to two years’ imprisonment.
Automatic enrolment legislation requires employers to provide eligible jobholders with a qualifying pension scheme, automatically enrol them into the scheme and make minimum levels of contributions to the workers’ pensions.
By February 2018, all employers will be covered by the requirement to automatically enrol workers in pension schemes.
For more information on penalties and late compliance see the following:
Written by Niamh Shortall | BrightPay Payroll Software
As an employer, what happens if you don’t meet your legal duties for automatic enrolment? The Pensions Regulator may take enforcement action including compliance notices, and penalty notices which include fines. If you, as an employer, refuse to pay the fine, The Pension Regulator (TPR) can recover the debt through the courts.
If you are late meeting your duties or think you are late, you must contact TPR immediately and backdate missed contributions to put all your employees back in the position they should be in if you had complied on time. Also, you need to inform your employees that they can choose to backdate their own workplace pension contributions to the staging date.
The Pension Regulator has a range of powers to use when investigating non-compliance:
· Request employers to provide information on a voluntary basis
· Issue formal notices
· Carry out inspections at the employer’s premises
· Use the courts to carry out investigations when necessary
Stages of enforcement
- Warning letter – this letter will contain a deadline for you to meet your duties
- Statutory notice – this will instruct you to comply with your duties and pay any contributions you have missed. TPR can estimate and charge interest on unpaid contributions.
- Penalty notices – If you fail to comply with the above statutory notice, TPR will issue a penalty notice to address individual types of breach as follows:
- Fixed penalty notice - this fine is fixed at £400 and must be paid within the time frame set in the notice
- Escalating penalty notice - this provides a new deadline to comply, after which you can be fined at a rate ranging from £50 to £10,000, dependent on the number of employees you have. This fine will grow at the daily rate set until you comply, or until TPR stop it.
- Prohibited recruitment conduct penalty notice - this fine can be from £1,000 to £5,000, again depending on the number of staff you employ.
Can an employer appeal?
If an employer feels that they should not have received a notice, they can appeal. First, they must apply to TPR for a review of the particular notice. This must be completed within 28 days of receiving the notice. When appealing against an escalating penalty notice, again the 28 day deadline starts from the date of the notice and not from the new compliance deadline date given.
An employer can also apply to a tribunal if they disagree with the review decision and if that notice includes a penalty.
Don’t delay or you could face prosecution – it is a criminal offence if an employer fails to put their employees into a workplace pension scheme and/or provide false information in a declaration of compliance. The maximum punishment can be 2 years in prison if The Pensions Regulator proceeds with prosecution.
If you receive a penalty notice then you can pay online through TPR’s secure online payment service. Ensure you pay by the date shown and have your penalty notice reference for payment. However, if your notice reference begins with the letters AE, you must follow the payment instructions on the notice as it cannot be paid online.
- Why using HMRC’s free payroll software, Basic Paye Tools, can cost you time and money.
- 5 Steps to Complete Employer Re-Enrolment Duties
- Understanding your Employer Auto Enrolment Ongoing Duties
Written by Lorraine McEvoy | BrightPay Payroll Software
Many people are not aware that if they employ someone to work in their home, such as cleaners, cooks and nannies, then they are considered employers under the automatic enrolment (AE) law.
There are several tasks that must be completed to ensure compliance with AE, all of which need to be fully adhered to by employers.
Some of these duties include:
- Choosing a suitable workplace pension scheme.
- Assessing each member of staff.
- Sending customised communications.
- Calculating employer and employee pension contribution amounts.
- Uploading contribution files to the chosen pension provider each pay period.
In order to avoid the increased workload and the potential fines, TPR has recommended that these employers look for a free or low cost payroll software with automatic enrolment functionality. BrightPay is a user-friendly payroll software that can streamline the administrative tasks involved with auto enrolment.
Employees are automatically assessed at the staging date and notifications will appear alerting employers that there are duties to be completed. Communications are customised to each individual employee and can be sent by email or printed at the click of a button. Contribution amounts are calculated automatically and a contribution file can be produced seamlessly for upload to the chosen pension provider.
To learn more about your auto enrolment duties as an employer you can download one of our free step-by-step guides:
- A beginners guide to auto enrolment for employers.
- Employer Checklist to ensure Auto Enrolment is Covered
- 10 Pitfalls When Choosing Software for Auto Enrolment
Written by Cailín Reilly | BrightPay Payroll
- Choosing a suitable workplace pension scheme.
Employers who set up a new PAYE scheme between 1 April 2012 and 30 September 2017 will be the next to reach their staging date. By February next year, all employers will be required to offer a workplace pension scheme to employees. Since the roll out of auto enrolment began in 2012, all employers have had a staging date which kick-starts their employer responsibilities. Through correspondence sent by The Pensions Regulator, employers have been aware of their staging date months before their auto enrolment responsibilities begin.
However, there is an issue for new employers who commence employment outside of the above auto enrolment staging date profile. This staging date process is nearing an end and new employers, who take on staff after 1st October 2017, will have immediate automatic enrolment duties. New employers will no longer be allocated a staging date in advance by The Pensions Regulator.
According to the Department for Work & Pensions (DWP), new employers will be expected to comply with their AE duties as soon as they hire their first employee.
This will mean that new employers will need to comply with auto enrolment straight away. For new employers, their auto enrolment duties will apply from the first date that the first employee starts to work for them. This is known as their ‘duties start date’.
Steps to Comply for New Employers
Where a business is about to employ someone for the first time, they will need to complete certain tasks in preparation for auto enrolment. Once they have registered as an employer with HMRC, you will need to inform TPR of the chosen point of contact for auto enrolment. The new employer will also be required to choose a pension scheme that will be suitable to their business and employees.
On the duties start date, similar to staging, all employees must be assessed to determine whether or not they need to be automatically enrolled into a pension scheme. Any eligible employees must be automatically enrolled into a qualifying auto enrolment pension scheme where the employer must also make contributions to the pension pot. Employer and employee pension contributions must meet the minimum contribution amounts.
Currently, minimum contribution rates are 2%, accounting for a minimum 1% employer contribution and minimum 1% employee contribution. However, these rates are due to increase over the coming years. There are two phased increases set to come into place which has been described as phasing. The first increase will take place in April 2018 and the second increase in April 2019.
On the 6th April 2018, the minimum total contribution towards an employee pension scheme will increase from 2% to 5%.
New employers who reach their duties start date on or after 6th April 2018 will immediately be required to comply and implement the total minimum 5% contribution rate. After 6th April 2018, new employers will need to pay the 2% minimum employer contribution due. Eligible employees will need to immediately pay a 3% contribution rate. Employers may choose to pay the total minimum contribution of 5% if they wish. In this case the employee would not be obliged to pay the staff contribution.
Minimum contributions will undergo further increases in April 2019, with the total minimum contribution rate increasing to 8%, representing a minimum 3% employer and 5% employee contribution. Again, new employers who reach their duties start date on or after 6th April 2019 will need to immediately implement the total 8% contribution rates. It is an employer’s responsibility to make sure that they are prepared for these new contribution levels.
Along with being enrolled into the pension scheme, all employees must receive communications informing them of how auto enrolment will affect them, regardless of whether or not they need to be enrolled.
For new employers, completing auto enrolment duties can seem like a lot of work. Good payroll software will automate these duties for new employers. There is still the option to postpone one or multiple employees for up to three months.
Once the three month or postponement period has passed, the employer will need to re-assess postponed employees and enrol eligible jobholders into a pension scheme. Postponing employees will give new employers additional time to prepare for auto enrolment. It is important to note that if an employer postpones an employee, the employee still has the right to opt into the pension scheme during the postponement period.
There will be a number of ongoing AE duties required each pay period, including assessing all employees, enrolling employees who have become eligible, handling any opt-in and opt-out requests, calculating relevant employer and employee pension deductions, sending enrolment and contribution files to the pension provider and making the payment to the pension provider.
Employers must also remember to complete their Declaration of Compliance within 5 months after their duties start date, to inform The Pensions Regulator that they have fully complied with auto enrolment.
Finally, every three years employers must put certain members of staff back into an auto enrolment pension scheme. This is called automatic re-enrolment. An employer can decide on their re-enrolment date from a 6 month window, which falls three months either side of the third anniversary of the staging date or duties start date.
An employer’s duties will vary depending on whether or not employees need to be re-enrolled. Either way, you will need to complete a Re-declaration of Compliance within 5 months to inform The Pensions Regulator that you have met your auto enrolment duties.
Both HMRC and The Pensions Regulator recommend that employers utilise payroll software that supports the process of auto enrolment. It is advisable that the payroll is also integrated with the chosen pension provider. Employers who use HMRC’s Basic PAYE Tools will be one of the most at-risk groups for auto enrolment non-compliance.
Payroll software, such as BrightPay, allows employers to seamlessly process auto enrolment with minimal workload and knowledge required. At the duties start date, BrightPay will automatically assess employees and inform the user of the duties that need to be performed. Enrolling employees is seamless and communications are automatically prepared, ready to print, email or export to PDF. BrightPay will continually assess employees in the background each pay period and notify you if an employee becomes an eligible jobholder.
Small and micro employers who use HMRC’s Basic PAYE tools present a higher risk of non compliance. While employers are not legally required to have adequate payroll software for auto enrolment, experience has shown that having software will streamline the process and improve compliance.
Almost 200,000 employers have reached their staging date by August 2017. As the micro employer hit their staging date, there is an inherent risk that any employers using BPT may not know how to assess their employees, calculate their contributions or have an automated mechanism to keep statutory records.
If employers continue to use Basic PAYE Tools, they will be required to undertake a series of manual calculations, decisions and actions each pay reference period in order to comply with their new responsibilities. Employers with complex workforces, for example fluctuating pay or pensions requiring contributions on banded earnings, are at an even greater risk of making mistakes.
Even if an employer is compliant, they may find it difficult to keep track of when an employee becomes eligible for automatic enrolment for the first time.
It is also important to note that Basic Tools does not allow users to print payslips.This is an important feature as employees have the right to a payslips where they can view the pension contribution amounts being made each pay period.
Avoid non compliance
Using a HMRC recognised, RTI automated and fully integrated payroll and auto enrolment software such as BrightPay will allow employers to streamline their payroll processes.
Our payroll software is free for employers with three or less employees. The standard licence for a single employer is only £99 +VAT per tax year while a bureau licence (multiple employers) is just £229 + VAT per tax year.
Both our standard and bureau licences allow for unlimited employees and includes full automatic enrolment functionality and free phone and email support.
Written by Lorraine McEvoy | BrightPay Payroll
The quarterly compliance and enforcement bulletin for the period April to June 2017 has been published by The Pensions Regulator (TPR). The main aim of the bulletin is to assist employers, their advisors, trustees and administrators with their duties and compliance for Automatic Enrolment and the enforcement procedures that TPR can undertake. This bulletin can be found here. The level of compliance from employers remains high and the amount of fines issued in line with the declarations of compliance remain in line with the previous year.
On this quarterly bulletin a list of fines issued to trustees of workplace pension schemes that have failed to complete scheme returns or failing to produce the annual chair’s statements have been included for the first time. This list includes national and multinational businesses and includes a number of well known companies.
Featured in this bulletin, with the introduction of the new legislation that schemes governed by trustees had to prepare an annual governance statement and be signed by the chair of trustees, is the news that most of these workplace pension schemes have complied. But it is reported that a compulsory fine was issued to trustees of 20 schemes for the failure of non-compliance as no chair’s statement was prepared in this period. The majority of the schemes that failed to comply had less than 100 members but in some cases were large employers. A further 45 fines were issued to trustees as they remained non-compliant after a warning was issued to them by TPR.
The latest details of employers brought to court were published in this bulletin. These employers were issued with an escalating penalty notice (EPN) for automatic enrolment non-compliance but the fines were not paid. Both national and multinational employers are included on the list, with County Court Judgments as high as £52,500 for some employers being obtained by TPR.
An example of an employer in the case study provided by TPR, is a solicitors firm based in London. They refused to provide documents to TPR that were required as part of one of their investigations. The firm was fined in excess of £16,000 including costs. TPR made numerous requests to the firm for the information they required but to no avail. The reason provided by the firm for the non-provision of these documents was that the documents were stored at a different location and they had trouble accessing them. Soon afterwards the managing partner of the firm advised TPR that the documents were located and they would forward same to TPR, but never did.
It was only when TPR obtained a search warrant for the firm that they located the documents they required. This was of such a serious nature that TPR decided that the actions of the firm warranted criminal prosecution. This is the first time TPR has decided this action was required.
TPR’s message to the regulated community:
“We will not hesitate to prosecute people who prevent us gathering the data we need for our investigations. Information notices are a key enforcement tool to help us tackle those abusing the system, and we will not tolerate refusal to comply with one of our legal requests.”
Written by Debbie Clarke, BrightPay Payroll Software
If you use HMRC’s Basic Paye Tools (BPT) to manage your payroll it is important to understand that this basic tool offers no functionality to cater for the needs of automatic enrolment (AE).
As an employer, there are several duties you must undertake to comply with auto enrolment. Using Basic Tools to process your workplace pension will be manual and time consuming. For example, each employee must be manually assessed to find out whether they need to be automatically enrolled.
Communications must also be manually produced and customised. The format of the auto enrolment letter is dependant on each employee’s eligibility. Other workplace pension duties include calculating contribution amounts for each employee, deducting this amount from the earnings and informing the chosen pension provider of the contribution amounts.
Employers who continue to use HMRC’s Basic PAYE Tools will be particularly vulnerable to enforcement action from The Pensions Regulator (TPR) if they fail to fully comply with their employer duties. TPR can issue fines starting from a £400 fixed amount and can eventually escalate to between £50 - £10,000 daily.
It is also important to note that Basic PAYE Tools does not allow you to produce payslips for your employees - this can lead to increased confusion when it comes to your employees understanding how auto enrolment affects them. Employees will not be able to view how much contributions are being paid into their pension pot, leading them to lean on their employer for clarification each pay period.
To avoid the risk of being fined for failing to comply with AE, The Pensions Regulator has recommended that users of HMRC’s BPT switch to low cost or free payroll software that can help with auto enrolment.
BrightPay is a payroll software that streamlines a lot of the administrative work involved with auto enrolment. Once you reach your staging date, on-screen alerts will notify you that there are auto enrolment duties to complete. Communications will be automatically produced and customised and available to print, export or email directly to your staff. Contribution rates are automatically calculated and can be viewed clearly on each employee's payslips. BrightPay will also produce contribution files for a number of pension providers and offers a direct API integration for NEST.
If you would like to see how easy BrightPay is to use, you can download our free 60 day trial. We also offer a seamless import for HMRC’s BPT users which imports your employee details within seconds.
Automatic re-enrolment takes place every three years and is the process where employers must re-enrol certain staff into an automatic enrolment (AE) pension scheme. Employees must be automatically re-enrolled if they meet certain criteria.
- Choose a re-enrolment date that falls within a six month timeframe - three months before or after the third anniversary of their staging date. For example, a staging date of 1st June 2014 would mean an employer must choose a re-enrolment date between 1st March 2017 and 30th September 2017.
- Assess certain staff, re-enrol them on the chosen re-enrolment date and start contributing to their pension from that date. Employers must assess staff who have previously opted out of the pension scheme, left the scheme after the opt out period or stayed in the pension scheme but have chosen to reduce their pension contribution below the minimum level.
- Write to staff who have been re-enrolled within six weeks of the chosen re-enrolment date informing them of what automatic re-enrolment means to them.
- Submit a re-declaration of compliance within five months of the third anniversary of their staging date or duties starting date, whichever applies.
On an ongoing basis, employers must continue to assess staff for auto enrolment each pay period and perform duties for anyone that becomes eligible. Fortunately for employers, some payroll software (such as BrightPay) can automatically assess employees each pay period, with prompts to enrol staff if enrolment is required.
BrightPay will also seamlessly handle your re-enrolment duties. Once you enter your chosen re-enrolment date, the software will automatically assess employees at the re-enrolment date and notify the user if any duties need to be carried out.
The Pensions Regulator (TPR) recently published their latest quarterly bulletin. For the first time, TPR has published the details of all employers that they secured a court order against as a result of automatic enrolment non-compliance. In each case, employers were issued with an EPN (escalating penalty notice) and failed to pay it.
TPR has also published the names of every employer who continues to ignore their automatic enrolment responsibilities, even though the Escalating Penalty notice was paid. The Regulator hopes by naming and shaming these employers, it will highlight the importance of employers meeting their auto enrolment obligations.
The first quarter of 2017 showed the highest number of Fixed Penalty Notices issued to date, with over 2,919 more when compared to the last quarter of 2016. The number of Escalating Penalty Notices that were issued are also on the rise, an increase of 870 compared to the last quarter of 2016. Additionally, there was an increase in the number of compliance inspections carried out by TPR. The number of inspections jumped to 224 for the first quarter alone in 2017, compared to 57 in total for all of 2016,. Interestingly, these increases are in line with increases in the number of UK employers who have reached their staging date.
To date more than 500,000 employers have met their automatic enrolment responsibilities,with approximately 8 million employees saving for their retirement. The Department of Work and Pensions published a study last December stating that there will be an extra £17 billion in pension savings by 2019/20 as a direct result of workplace pensions.
How Payroll Software can help?
Auto enrolment is a relatively straight forward process once you have the correct payroll tools in place. Payroll software like BrightPay can automate your employer automatic enrolment duties for you. Simply enter your staging date and the rest is simple. Process assessment, automatic enrolment communications, enrolment, postponement and more with ease. Avoid penalties from The Pensions Regulator and book a demo today to see just how easy automatic enrolment can be with BrightPay.
It is your employer’s responsibility to ensure that they meet their legal duties for automatic enrolment (AE). If you’re concerned that your employer is not complying with their AE duties you can report your suspicion directly to The Pensions Regulator (TPR).
However, you must consider that all employers will begin their AE duties at different times. Your employer will receive receive documentation from TPR stating their ‘staging date’, indicating when they must start their AE duties.
If your employer has failed to comply with their automatic enrolment duties on time they must back date all payments that would have been paid into your pension pot from their staging date. An employee will also have the option to backdate any missed contributions on your own behalf.
If your employer continues to ignore their AE employer duties, they can face enforcement action from TPR. This can include a fixed fine of £400, escalating daily fines of between £50 - £10,000 depending on the number of staff. Potentially, your employer could even face formal legal proceedings.
Additionally, it is important to note that it is illegal for an employer to try to persuade an employee to opt-out of a workplace pension scheme. It is also illegal for an employer to imply that it will have a negative impact on you securing a role during an interview if you will not choose to opt-out of the company’s AE pension scheme. As an employee, if you have concerns you can contact the Pensions Regulator for more information.
Written by Cailin Reilly | BrightPay Payroll & Auto Enrolment Software
An employer's declaration of compliance is one of the most important automatic enrolment duties and it should not be left until the last minute. It is never too early to start preparing. This blog will take you through the various steps employers will need to understand to successfully complete their Declaration of Compliance.
What is the Declaration of Compliance?
The Declaration of Compliance is an online form for all employers to complete and submit to The Pensions Regulator (TPR). It explains how the employer has fulfilled their automatic enrolment duties and it must be submitted within five months of an employer’s staging date. Failing to submit a declaration or submitting false information could result in fines for the employer. Employers can authorise someone else to complete the declaration on their behalf. However, it remains the employer’s legal responsibility to make sure the form is completed accurately and on time.
What information is needed?
When filling out the Declaration of Compliance, employers will need both their letter code and PAYE reference to log on to TPR’s compliance online service.
- A letter code is a 10-digit code unique to every employer, it can be found on any correspondence from The Pensions Regulator. If the letter code was misplaced or it was never received, you can contact TPR and request it.
- A PAYE reference can be found on the letter from TPR regarding auto-enrolment, on the HMRC letter that was received after first registering as an employer or from their payroll software.
- The number of workers employed on the staging date
- The number of employees enrolled into the auto enrolment pension scheme
- The number of employees that were already in a work pension scheme
- Details about the pension scheme the employer is using for auto-enrolment
- Either the pension scheme registry number or the employer pension scheme reference
As previously mentioned, the Declaration of Compliance must be completed within five months of an employer’s staging date. If the declaration deadline falls on a weekend or public holiday it can be submitted on the next working day. However, it is not recommended to leave submission until the last minute.
It is advisable that employers begin filling in their Declaration well in advance of the declaration deadline. By leaving everything until the last few days, employers will run the risk of being fined if they fail to complete the Declaration on time and accurately.
When it comes to postponement, The Pensions Regulator will need to know how many employees were enrolled in an automatic enrolment pension scheme on the most recent deferral date. In this case, employers can only submit their declaration after the postponement period has ended. This will leave very little time before an employer’s declaration deadline, therefore, it is a good idea to fill in details as soon as possible after postponement.
Your ongoing automatic enrolment duties
Once the Declaration of Compliance has been completed, employers will need to continue their automatic enrolment duties on an ongoing basis. This includes assessing each of their employees every pay period, calculating contributions and submitting contribution files to the pension provider.
It should also be noted that every three years employers will need to re-enrol certain staff back into an automatic enrolment pension. After this, employers will again need to submit a re-Declaration of Compliance. The re-declaration of compliance must be submitted by employers, even if no employees meet the criteria for re-enrolment. The deadline for submitting the re-declaration of compliance is five months after the third anniversary of the employer’s staging date.
Read: 5 Steps to Complete Employer Re-Enrolment Duties
BrightPay Simplifies Auto Enrolment and Re-enrolment
BrightPay is a user friendly payroll package that makes the auto enrolment and re-enrolment journey easy. BrightPay reduces the workload of automatic enrolment by automating employee assessment, enrolment, producing letters and is integrated with 18 pension providers. Try it out for yourself with a 60 day free trial or you can book a demo to find out just how easy auto enrolment can be with BrightPay.
Employers across the UK are helping their staff save for retirement by introducing auto enrolment. However, for small and new employers, auto enrolment may seem like a daunting task. This blog will outline the auto enrolment steps you need to complete to support you on your journey of helping your employees prepare for their retirement.
Automatic Enrolment is a government initiative that was initially set up to counter the situation where people are living longer but not saving enough for retirement. As a small or new employer, you may be fast approaching your staging date. You should have received a letter or email from The Pensions Regulator informing you of this date, which will be the first day in a given month.
Upon reaching your staging date, your auto enrolment duties will commence. You will have to assess all your employees to determine their worker category. The following graph will explain the criteria for each category:
If you have any eligible employees, you must set up a workplace pension scheme and enrol eligible employees into the scheme. If you do not have any eligible employees, it is still recommended that you choose on a pension scheme to use, just in case an employee decides to opt in or join the scheme.
Not all pensions schemes will meet the criteria for auto enrolment. Therefore it is wise to spend some time researching different providers. Also, not all pension providers will have schemes that cater for small companies or all employees. To counter this, the government have set up NEST, which is a pension scheme that must accept all employers regardless of earnings.
Once you have determined which category each employee falls into and enrolled eligible employees, you must send letters communication to all employees. A letter will inform non-eligible and entitled jobholders of their right to opt in or join the pension scheme and give information about the contribution rates. Another letter will inform eligible jobholders that they have been enrolled, the contribution rates for both the employer and employee and give information about their right to opt out of the pension scheme.
You must continue to assess each employee, every pay period to determine whether or not they have become an eligible jobholder. You must also process any opt in or opt out requests that you receive from your employees and calculate any refunds that they are owed if they are within the opt out period.
Processing auto enrolment effectively
When it comes to auto enrolment, there is a lot to do. Performing these tasks manually or using the cumbersome HMRC Basic PAYE tools will take up valuable time that you could be investing into your business. Fortunately there is an easy to use payroll solution that can help. BrightPay is a payroll software that automates your auto enrolment duties that otherwise would be time consuming. It will assess all your employees each pay period notifying you if an employee becomes an eligible jobholder.
BrightPay also generates the unique letters you need to send to each employee, letting you bulk print or email them to your staff. The software will calculate both employer and employee contributions, add them to employee’s payslips and seamlessly allow users to create a unique contributions file for 18 compatible pension providers. There is even a direct API integration for both NEST and Smart Pension with more pension provider integration on the way.
For only £99 + VAT per tax year, for an employer payroll licence, BrightPay will save you valuable time that you can then dedicate to your business. This licence includes unlimited employees, auto enrolment functionality and free support. For those employers with 3 or less employees, we offer a free licence that includes the same payroll and auto enrolment functionality as our standard licence.
If you are still unsure as to whether or not BrightPay is for you, download a 60 day free trial today. BrightPay demo and see for yourself just how easy the software is to use and just how much time you could be saving each pay period.
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