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Those firms that employ low-paid staff who aren’t eligible for auto enrolment must still have a pension scheme in place so that these workers can opt-in or join the scheme.
Why is there a need to have an AE compliant pension scheme in place before any Non-eligible Jobholders choose to opt in? Is this just a matter of the practical difficulty of being able to set up a scheme in time if someone does ask to opt in?
As Entitled Workers only have the right to ask their employer to run a pension scheme for them, to which the employer need not contribute and which is not therefore an AE compliant scheme, why do you say that there must be a pension scheme in place just in case an entitled worker might ask to join one?
Not correct
If you have no workers to auto enrol, you do not need a pension scheme
If your employees decide they want to opt in, at that point you neeed to establish a qualifying scheme
Not correct
If you have no workers to auto enrol, you do not need a pension scheme If your employees decide they want to opt in, at that point you neeed to establish a qualifying scheme
If a PAYE scheme is in place, and ANY staff whether they be Non-Eligible, Eligible or Entitled for the pension, a pension scheme must be in place. The only exception to this rule is when a Ltd company has a PAYE scheme, which is purely to pay directors where a maximum of one director has a contract of employment.
By not having a scheme in place, you would face penalties from the pension regulator, regardless of whether any staff are automatically opted into the scheme or not. Any employee has an option to opt into the pension scheme, and if a pension scheme is not open, how can they opt in?
Still not correct
If you have no workers to auto enrol, you do not need a pension scheme If your employees decide they want to opt in, at that point you neeed to establish a qualifying schemeIf a PAYE scheme is in place, and ANY staff whether they be Non-Eligible, Eligible or Entitled for the pension, a pension scheme must be in place. The only exception to this rule is when a Ltd company has a PAYE scheme, which is purely to pay directors where a maximum of one director has a contract of employment.
By not having a scheme in place, you would face penalties from the pension regulator, regardless of whether any staff are automatically opted into the scheme or not. Any employee has an option to opt into the pension scheme, and if a pension scheme is not open, how can they opt in?
I sent the following question to TPR
'Please can you just let me know if my understanding is correct. If a scheme consists of only non-eligible job holders, they do not have to set up a pension scheme for auto enrolment. I believe they do however need to complete the Declaration of Compliance on your website.'
This is the reply I received
'Thank you for your recent email dated the 21 January 2015. An employer will need a pension scheme in place when necessary this is where a worker meets the eligible job holder criteria or when an employer receives a valid opt in notice. Please note that if the employer does not have any eligible job holders on the staging date the employer may not need a pension scheme in place. However if any of the above occurs the employer will need to have a scheme in place and ensure active membership is achieved within the six week joining window. Furthermore, every employer must declare compliance with the Regulator. Employers have up to five calendar months from their staging date to declare their compliance via our online portal.
Very confused by the whole situation
An employer will need a pension scheme in place when necessary this is where a worker meets the eligible job holder criteria or when an employer receives a valid opt in notice.
How do they specify a valid opt in notice? for example, now:pensions writes out to employees who are not eligible, giving them the option to opt in. Now:pensions then issues an opt in notice, but if a scheme is not set up, who is providing the employees with that information? Is it then the responsibility of the employers to write to staff and provide an opt in notice?
Opt
How do they specify a valid opt in notice? for example, now:pensions writes out to employees who are not eligible, giving them the option to opt in. Now:pensions then issues an opt in notice, but if a scheme is not set up, who is providing the employees with that information? Is it then the responsibility of the employers to write to staff and provide an opt in notice?An employer will need a pension scheme in place when necessary this is where a worker meets the eligible job holder criteria or when an employer receives a valid opt in notice.
It is the employers responsibility to write to all their employees to tell them which category they fall into. They have to tell all Eligible Jobholders that they will be Auto enrolled, (if the have any) and write to Non Eligible Jobholders and Entitled workers to say that they wont be enrolled unless they opt in.
The legislation is clear that employers have to make a pension scheme available for Eligible Jobholders at outset or where Entitled Workers or Non-Eligible Jobholders request to opt in or join. This applies even if all Eligible Jobholders opt out. The Declaration of Compliance requires each employer to confirm what scheme(s) they are using.
You are correct that there could be practical difficulties with setting up a scheme for only this type of worker, especially if it is left to the last minute. We would always recommend that employers have a scheme in place from their staging date for this very reason. Employees can become Eligible Jobholders in any payroll period.
The number of employers staging is about to increase dramatically and over 100,000 employers will be staging each quarter from the start of 2016. Providers are already regularly reviewing their criteria to manage volumes. Offering a scheme for only low paid workers that may never have any members is never going to be the most attractive for commercial providers. As such, employers who have Entitled workers only are likely to have a restricted choice available to them.
One other comment – I think you are suggesting that employer contributions make a scheme AE compliant. That’s not the case. The criteria that make a scheme a qualifying scheme relate to the pension itself and are things like ensuring the default fund charges are within the government’s charge cap and that a member can be enrolled without the need to return any paperwork.