All employers who have at least one worker will have automatic enrolment duties. You’ll need to assess your staff, put those who meet certain criteria into a pension scheme (and make contributions to it), tell them what you’ve done, and complete a declaration of compliance.
‘Assessing your staff’ is a key step to take to comply with your automatic enrolment duties. Quite simply it means considering the age and earnings of the people you employ and identifying who needs to be automatically enrolled and who doesn’t.
Formal assessment of staff
Not every member of staff needs to be automatically enrolled. It depends on their age and earnings – those who earn above £192 of qualifying earnings in a week (or £833 in a month) and who are 22 or over (but under state pension age) must be put into a pension scheme.
If you employ staff whose hours vary (e.g. zero hours contract), pay fluctuates, are seasonal or are on short-term/temporary contracts the legal duties will still apply to you.
If any of your staff fall outside of the above age and earning criteria then you only need to put them into a pension scheme if they ask.
The Pensions Regulator has a tool on their website to help with your assessment – www.tpr.gov.uk/ae-checker.
NB: If you’ve worked out that you don’t have staff to put into a pension scheme, it’s important to know that you still have other tasks to carry out in order to meet your legal duties – you will still have to write to individual staff members to tell them how automatic enrolment applies to them. The Pensions Regulator has templates on their website that will help you with this.
Which earnings qualify for automatic enrolment?
Qualifying earnings include wages, salary, fluctuating elements of pay, bonuses, and some statutory payments, such as maternity and sick pay. We recognise that not all pay elements fit neatly inside these headings, and a good rule of thumb is that if earnings are subject to National Insurance contributions, then they are likely to also qualify as earnings for automatic enrolment. Payroll software should help with this, and also where earnings fluctuate on a week-by-week or month-on-month basis.
Many payroll providers already provide a module or an add-on for automatic enrolment that will do this earnings number-crunching for you, as well as calculating the correct contributions, and helping with your ongoing duties. Look at your payroll software to find out how it can help you with automatic enrolment.
What do I need to do once I’ve assessed my staff?
Having worked out what you need to do for each person you employ, the next step is to then put those that you need to into a pension scheme and to write to each person individually.
Unless you want to use an existing pension scheme for automatic enrolment, you’ll need to find a scheme yourself or get help from your accountant or a financial adviser. The Pensions Regulator has information that can help you with this – www.tpr.gov.uk/employers
Once you’ve chosen which pension scheme you want to use, you’ll need to give your pension scheme provider information including staff name, address, date of birth and earnings, so that they can set up your staff in the pension scheme.
Each time you pay your staff you will need to calculate how much you (and they) need to contribute in and arrange for this to happen. Payroll software may help do this for you.
One of my staff has a second job with a different employer; do I have to take this into account when assessing them?
You only need to consider staff who are employed by you. Their earnings from another employer do not form part of your assessment.
If a member of staff’s earnings are less than or equal to £192 a week, must they be put into a pension scheme?
If your member of staff’s earnings are less than or equal to £192 a week (£833 a month) you do not have to put them into a pension scheme that you pay into, unless they ask to join the scheme. However, you will still have other duties which include writing to all staff individually and completing your declaration of compliance. Use The Pensions Regulator’s Duties Checker to understand the specific duties you have.
I’m the only director of my own company – do automatic enrolment duties apply to me?
If you are the sole director and you have no other staff working for you, the company does not have automatic enrolment duties. If you have received a letter from The Pensions Regulator but you do not have automatic enrolment duties, then you will need to tell them that you’re not an employer. Failure to alter them to your circumstances may trigger compliance action – go to www.tpr.gov.uk/ae-checker now.
What if my business only has directors?
You won’t have any automatic enrolment duties if any of the following apply:
- you are the sole director
- you are all directors, none of you has an employment contract
- you are all directors, only one of you has an employment contract
Automatic enrolment will apply if more than one director has a contract of employment. In this case, if your client does have automatic enrolment duties for a director, and the director meets the age and earnings criteria above, your client is not required to automatically enrol them unless your client chooses to do so.
More information on assessing your staff for automatic enrolment can be found by clicking below.