Automatic Enrolment - Brief Updates
An article by Darren Ryder, director of automatic enrolment, The Pensions Regulator (TPR), explains what new businesses need to consider, ongoing duties, the increase in contributions and the importance of compliance.
To date, more than 8.5 million workers have been automatically enrolled in a workplace pension by nearly 800,000 employers.
TPR recently published their annual commentary and analysis report, which shows that more than 70% of all new businesses will have staff they will need to put into a workplace pension. This means the majority of new employers will have full automatic enrolment duties and will need to set up a pension for their staff.
The estimates demonstrate how automatic enrolment has and will continue to reverse the decline in workplace pension saving. In 2012, 55% of staff were saving into a workplace pension, this had risen to 78% by 2016.
In addition, a recent Mori poll commissioned by DWP also showed 83% of staff are pleased they are saving into a workplace pension and a similar number welcome an increase in contributions.
If you become an employer for the first time on or after 1 October 2017, you will have immediate legal duties for your new member of staff. These duties apply from the first day the first member of staff started working for you. This is known as the Duties Start Date. You must comply with the duties straight away.
Within five months of taking on staff, employers must complete a declaration of compliance to inform TPR what they have done to meet their auto enrolment duties.
Increases in Contributions
By law, on 6 April 2018, all employers are required to increase their contributions into their staff's automatic enrolment pension to at least of 2%. Staff contributions will also increase so that their contributions make up the shortfall needed to bring the total minimum contribution up to 5%.
Contribution levels will rise again on 6 April 2019, with employers paying a minimum of 3% towards the pension, and the total minimum contribution reaching 8% - with staff making up the 5% difference.
TPR Spot Checks on Employers
TPR enforcement teams have been making spot checks around the country, to make sure employers are complying with their automatic enrolment duties and that they are giving their staff the workplace pensions they’re entitled to. These inspections help them to understand any challenges employers are facing, and whether they need to make any changes to their guidance.
They also enable them to identify employers who fail to meet their duties, and take enforcement action where necessary – employers getting away with non-compliance isn’t fair on businesses who have taken the time to meet their responsibilities. They’ll be continuing their checks over the coming months usually sending a statutory notice to the employers they’ve selected ahead of their visit.
Written by Caoimhe Byrne, BrightPay Payroll Software