Implementing and administering auto enrolment (AE) is a significant challenge for many small businesses and their advisers involved in the process.
Whether you’ve selected a solution for clients already or are in the process of picking one, it’s worth considering the following ongoing administration pointers.
Compliance is critical to the smooth running of AE. Every aspect of how your and your clients implement auto enrolment needs to demonstrate compliance with the legal duties.
The rules determining worker status are straightforward, but the greater challenge comes in defining individual processes like opt-ins and opt-outs, and then overlaying these with timelines based on the business’ payroll and HR processes.
Keep your data up-to-date regarding the ongoing assessment of your workforce, PAYE references, setting up new delegates and removing delegates.
Workflows and evidence will be needed to support these processes.
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At all stages of the AE journey it’s vital to keep good records as the Pensions Regulator (TPR) requires you to keep records about the pension scheme. You’re responsible for keeping your records up-to-date.
Also if you’re using an earnings basis other than qualifying earnings you’ll need to complete a certificate at least every 18 months. Familiarise yourself with the TPR’s detailed guidance on AE compliance.
Engagement and communication
It’s important to tell TPR that you’ve chosen a scheme to meet employer duties within the four months after your staging date. This is called completing the declaration of compliance.
Declaration of compliance is an online form that lets TPR know how employers have met their legal duties for AE. If you’re an employer (or someone acting on behalf of an employer) you can use this form to complete a declaration of compliance and complete a re-declaration of compliance. It can also be used to tell TPR about bringing a staging date forward.
Good communication with workers is essential so it’s important to set communication plans early on and ensure that information to facilitate them is captured. At the same time early engagement with providers is key, so early on map out your end-to-end AE process, recognising that this starts in the organisation with new joiners and flows through to the pension scheme provider.
Going forward you may want to make changes to your scheme. For example, to introduce a new payment source or different contribution levels for workers. So you should look for pension schemes that work efficiently and effectively but also offer flexibility to meet your and your clients’ needs.
After three years you will also need to tackle re-enrolment. This cyclical automatic re-enrolment is a legal requirement every three years after an employer’s staging date. It’s a repeat of the process the employer carried out on their staging date; however there are some key differences.
One key difference is who it applies to. For example, it includes workers who a year or more before the re-enrolment date stopped making contributions or who opted out without having since opted back in.
Another is that employers can’t use a postponement period for three year re-enrolments. There is, however, the flexibility to choose any date either three months before or after the automatic re-enrolment date to fit around normal business processes.
NEST has developed a number of useful resources to help with the day-to-day running of their pension scheme. They have a range of materials that you can use with clients to help communication with their workers about auto enrolment including leaflets, posters, videos and templates. In addition their online help centre and library has over 700 pages of step-by-step instructions and guides. You can find out more about the tools they offer and about how they can help with ongoing auto enrolment administration at: nestpensions.org.uk.