Auto Enrolment Explained
From 1st October 2012, all employers in the UK, starting with the largest having over 120,000 employees must enrol all of their eligible employees into a qualifying workplace pension scheme.
Employers have varying ‘staging dates’ dependent upon their size and the responsibility to ‘automatically enrol’ certain employees; this is not the responsibility of the chosen pension scheme. Data management is essential to the success of this process and the Pensions Regulator has issued a number of advice documents showing how this can be achieved.
You can learn more about all aspects of Auto Enrolment from our extensive FAQs on this page.
What is Auto Enrolment?
Auto Enrolment refers to recent pension’s legislation which affects all employers in the UK. In April 2012 each employer was assigned a specific date, their staging date, from which they must comply with new pension requirements.
Compliance with the new legislation is compulsory and failure to meet the requirements may result in substantial fines.
BlueSky have compiled the following step by step guide to help you simplify the process and ensure that you are fully compliant by your Staging Date.
You must ensure that you comply with your Auto Enrolment duties even if you currently operate TBPS or another scheme.
Know your staging date
Your staging date is key as it is when the duties start to apply to you. To find out your specific date follow the link below and enter your Company PAYE reference when prompted:
You are able to postpone your staging date for up to 3 months (see section Postponement Options) but you are not able to delay or opt out of your Auto Enrolment duties.
You are able to postpone your Auto Enrolment duties by up to 3 months but you must ensure that you communicate with your employees within 6 weeks of your original staging date to confirm that the duties are being postponed and give prescribed information about the Auto Enrolment process. Your employees can elect to join the pension scheme in the postponement period but would not be automatically enrolled.
Other postponement options that can be used are up to 3 months postponement from employment date, for new employees, and up to 3 months postponement from the date that employees become eligible for Automatic Enrolment. These options may help to reduce your costs for short term or temporary staff but please be aware that employees have the right to opt into the scheme at any time.
You do not have to notify The Pensions Regulator of your postponement decision in advance.
Nominate a contact
Nominating someone who will manage or implement automatic enrolment for you ensures that the Pensions Regulator (tPR) will send information to the right person.
Nominating a contact does not mean you have finalised your registration with tPR.
Prepare a plan
Once you know your staging date, you can work backwards to develop a plan to determine the preparations you will need to make and when.
You will need to involve key people in your planning; payroll, HR, accountants and BlueSky, as they will be carrying out some of the day-to-day activities once Automatic Enrolment is up and running.
As part of your preparations, you should log in to tPR registration online using the link below and start providing some of the information required as it becomes available. You can add information you already know, such as the employer address and your PAYE reference.
When you set up your pension scheme you can add the scheme information, like the employer pension scheme reference and the address. This will save time and help you avoid missing your registration deadline.
Know your workforce
It is likely that you will have employer duties for all staff on your PAYE payroll. What you will need to do depends on their ages and how much they earn.
Your employees will need to be assessed at every payroll and put into one of the following categories:
Employees who are aged between 22 and State Pension Age who are earning over £10,000 pa.
These employees will need to be automatically enrolled into a pension scheme and have contributions paid.
Employees that fall outside of the Type 1 age and earnings criteria will only need to be enrolled in to the pension scheme if they wish to join.
Non Eligible Jobholders
Employees who are aged between 22 and State Pension Age who are earning between £5,824 pa and £10,000 pa.
employees who are aged between 16 and 21, and State Pension Age and 74 who are earning over £5,824 pa.
These employees are not automatically enrolled but can elect to join the pension scheme and have contributions paid.
Employees who are aged between 16 and 74 and are earning less than £5,824 pa.
These employees are not automatically enrolled but can elect to join a pension scheme, employers are not required to contribute.
You may wish to assess your employees during your planning period to ascertain the number of employees that must be automatically enrolled and the cost impact this will have.
Check process and software
You will need to make sure your payroll software will support automatic enrolment. Many of the functions necessary for handling the specific requirements will need to be automated, such as:
- Monitoring the ages and earnings of your staff
- Communicating with your staff about their options
- Deducting and paying contributions to the scheme
- Handling requests to join the pension scheme from employees who have not been automatically enrolled
Making sure your systems work
Allow time to test your systems to make sure they perform the required functions. You will need to make sure all your staff records are up to date so the information you put in produces an accurate report. You should be confident by your staging date that your systems are able to carry out all of the functions necessary to be compliant.
BlueSky recommend 2 full sets of data are submitted prior to your staging date to ensure that you are able to meet your employer duties. BlueSky is working with a number of payroll providers to make the data transition as smooth as possible
Review pension arrangements
If you do not have a pension scheme you will need to nominate a scheme into which you can automatically enrol or offer membership to your employees.
If you already have a pension scheme you will need to decide whether you want to carry on using it. BlueSky should be able to transfer any legacy pension arrangements.
To join TBPS, one of the UK’s largest Master Trusts with a reputation built on nearly 30 years of experience use our SUN Form (Sign Up Now)
Remember you are automatically enrolling employees into a pension arrangement which you have selected for them. It is important that you select a high quality arrangement which works to give them the best outcome at retirement.
Getting your scheme up and running
Once you have nominated TBPS (using the link below) you will be asked to provide the following:
- Signed Deed of Participation, generated at the end of the SUN process.
- Confirmation if you wish to use the BlueSky RAE to assess your employees.
- 2 sets of test data prior to staging, in an agreed format.
- Full ‘real’ data at your staging date and prior to every subsequent payroll.
- Contribution information after every payroll to confirm the actual deductions from pay, in an agreed format.
Contribution payments should be sent by BACs using the following information:
Bank Name: HSBC
Bank Address: 249 High Street, Orpington, Kent, BR6 0NR
Account Name: BlueSky Pension Scheme
Account Number: 84570960
Sort Code: 40-05-30
Reference: Company Name or Companies House Reference
Further assistance and information regarding the format of data can be obtained by Contacting us
Communicate with staff
Raise general awareness among your employees well in advance of your staging date. BlueSky can provide you with a simple poster to start your communications. You may wish to follow this with a more detailed letter, BlueSky are able to provide some clear text for inclusion in company correspondence.
Write to each of your Employees – You must do this within 6 weeks of your staging date
One of your new duties is to write to each member of staff telling them how Automatic Enrolment law affects them, for example, whether they’ve been automatically enrolled, or that Automatic Enrolment has been postponed for them. You must do this within certain time limits, within 6 weeks of them being enrolled, or within 6 weeks of your staging date if you’re postponing.
What you must tell them is different depending on their rights and whether you have postponed Automatic Enrolment for them. You can postpone Automatic Enrolment for some or all of your staff for up to three months from staging.
Start planning these communications before your staging date, so you know who should receive what information. BlueSky’s Real time Auto Enrolment system can issue these communications on your behalf.
Further information can be obtained by contacting us.
Enrolling Type 1 Staff (eligible jobholders) – You will have a maximum of 6 weeks
Once you know who you need to automatically enrol (section – Know your workforce), you will need to provide BlueSky with specific information to get their membership up and running (section – Getting your scheme up and running).
If you have postponed Automatic Enrolment from staging, you will need to assess the ages and earnings of each member of staff on the last day of the postponement period, to see who is eligible for Automatic Enrolment. You will have 6 weeks from the end of the postponement period to automatically enrol any staff who are eligible.
If you have not postponed, you will need to assess the ages and earnings of all staff on your staging date. You will need to automatically enrol anyone who is eligible within 6 weeks.
Keep records of who you have enrolled. You will need to tell tPR how many you have enrolled into which scheme at registration.
You must not say or do anything that could be viewed as influencing any of your staff to opt out of your pension scheme. This is referred to as ‘inducement’ which is a breach of the law and could result in fines.
Declaration of Compliance
The Declaration of Compliance is the legal requirement to submit information to The Pensions Regulator (tPR) about how you have complied with your employer duties. If you do not provide the information required you may face enforcement action and incur a fine.
Your registration deadline is five calendar months from your staging date, even if you use postponement.
If your registration deadline falls on a Saturday, Sunday or public holiday, you can provide your registration on the next working day.
You need to provide the information online. You will need to provide information like the details of the pension scheme you have used for Automatic Enrolment and how many people you have automatically enrolled into it.
Even if you have not automatically enrolled anyone, you will still need to complete registration.
We recommend starting as soon as you can. Adding the required information as it becomes available will help make sure you do not miss your deadline. Registration will be complete once you make the declaration and submit all the required information by tPR at the following link:
The information required for TBPS is as follows:
Type of pension scheme: Occupational Pension Scheme
Employer Pension Scheme Reference: Your Companies House number
Pension Scheme Reference: 10170468
Name and Address of scheme:
PO Box 128
Certain records must be kept about your staff and about the pension scheme. Some of these will be kept by the pension scheme, some must be kept by the employer.
- Names and addresses of staff you have automatically enrolled
- The contributions payable to the pension scheme and when they were paid
- Any opt-in or opt-out notices you receive
- Name and address of the pension scheme
- Employer pension scheme reference or pension scheme registry number
Make sure you know what these records are and where to get them from. You will also need to decide how you will store them so you can easily access them. You will need to be able to produce these records if we ask to see them. Keeping records is good governance and is proof that you have carried out your duties.
These records must be kept for a specified time, which in most cases is six years.
Although it may seem as though all the work happens before your staging date, that doesn’t mean that it is all done with when your staging date arrives. The preparations you have made in the run-up to your staging date will allow you to manage Automatic Enrolment on an ongoing basis.
With the right preparation and BlueSky’s assistance your Automatic Enrolment activities will soon become ‘business as usual’.
Further information on this guide or the services that BlueSky can offer can be obtained by contacting us.