A new law means that every employer must automatically enrol workers into a workplace pension scheme if they:
are aged between 22 and State Pension age
earn more than £10,000 a year
work in the UK
This is called ‘automatic enrolment’.
2. “We’re all in”
2012
Larger Employers
2018
All Employers
• Staging Date – the date auto enrolment applies to your company
• Find it with your PAYE number on Pension Regulators website
• The Pension Regulator will notify you 12 months in advance
• Staging Date may be postponed for 3 months
• Be prepared! Link with a pension provider
3. Assessing All Employees
Eligible Jobholders Non-Eligible Jobholders Entitled Workers
MUST be enrolled Can opt in to auto enrolment Can ask to join but there is no
obligation on employer to
contribute
Aged between 22 & state pension
age
Aged between 16 and 74 Aged between 16 and 74
Earn more than the earnings
trigger (£10,000 in 2014/2015)
Earn over the NIC LEL Do not earn NIC LEL
4. Deductions and Contributions
(EE and ER)
•Employee deductions are made from net pay, with 20% tax relief
•Percentages are applied to all earnings (SSP, overtime, etc.) in excess of LEL and up to a
maximum of the Upper Earnings Limit (UEL)
•Contributions must be paid by 22nd of following month & shown on payslip
Date Total Must Be Employer must contribute a
minimum of
Oct 2012- Sept 2017 2% 1%
Oct 2017 – Sept 2018 5% 2%
October 2018 onwards 8% 3%
5. Communications
•Eligible Jobholders
Confirm they are being enrolled
How much is being deducted/contributed
How deductions/contributions will change up until 2018
Employees ability to opt out within a month
•Non-Eligible Jobholders
Give option to opt in and outline process of doing so
•Entitled Workers
Inform them they can join a scheme that the employer will administer
•Already a Pension Scheme Member
No auto enrolment need but need to be kept informed
6. Communicating Postponement
•Employees must be informed of postponement
•Eligible and non-eligible jobholder have the right to be enrolled prior to the deferred date
•Deferral = 1 month or less, enrolment/postponement communications can be merged
•BrightPay will facilitate all communication categories
8. Ongoing Monitoring, Assessment & AE
Events
•Continuous communication with pension provider
• Details of what has been deducted after every pay period
• File can be uploaded as a CSV file
•Monitor all Workers
• Has someone turned 22
• New employees
•Postponement can be used:
• If an employee breaches earnings trigger but usually would be below this level
• To avoid enrolling short-term workers
9. Pay Period Combinations
An entitled worker now earns more than the LEL but less than the ET (becoming an non-eligible jobholder) – let him know that he can opt
in to AE i.e. communicate
An entitled worker or non-eligible jobholder earns above the ET (becoming an eligible jobholder) and postponement is not used – enrol,
communicate and start deductions/contributions
An entitled worker or non-eligible jobholder earns above the ET (becoming an eligible jobholder) and postponement is used –
communicate
A worker who is already enrolled now earns below the ET – continue to calculate on amount in excess of LEL – their status does not
change – no action required
A worker who is already enrolled now earns below the LEL – zero deduction/contribution – their status does not change – no action
required
A non-eligible jobholder turns 22 and postponement is not used - enrol, communicate and start deductions/contributions
A new employee starts and falls into the eligible jobholder category and postponement is not used - enrol, communicate and start
deductions/contributions
An employee who is already enrolled opts out within one month – unenrol, stop deductions/contributions and refund all deductions to
date. (One of the fundamental rules of AE is that an employee cannot be coerced to opt out!)
An employee who is already enrolled opts out after one month – unenrol and stop deductions/contributions
10. The Pensions Regulator
•Informs employers of their staging date
•Employers can get their own staging date using a calculator on their website
•Compliance with Auto Enrolment must be logged with the Regulator at the latest 5 months after
their staging date
11. Pay Reference Periods
•New rules as of 1st April 2014
•Pay periods may be defined as tax periods (tax weeks, months or fortnights)
•Any first part period may be zero (rather than having to apportion days)
•Example:
• Employer has 6 weeks to physically enrol an employee
• Previously “joining window” was 4 weeks
• However, deductions must be calculated from actual enrolment date
12. Pay Reference Periods Definitions
•For assessment purposes, the relevant pay reference period is the pay reference period in which
the assessment date falls e.g. the staging date or postponement date or date of starting
employment or date of turning 22
•The first contributions that need to be deducted for a worker who’s automatically enrolled apply
from the first pay day on or after the automatic enrolment date irrespective of when that pay
was earned, however, contributions don’t need to be calculated until the first full pay reference
period.
13. Example
• Joe is paid monthly with ABC
Limited
• Payment is made on the last
working day
• ABC Limited staged on 1st
November 2014
• Joe’s 22nd birthday is 3rd
September 2015
• Joe’s assessment date falls in
the tax month of 5/9/2015
• The relevant pay day is 30th
August 2015
• Joes taxable pay on this day is
in excess of monthly ET
• Postponement utilised
• Joe should be enrolled from 3rd
Sept. He should receive a
letter
• First payday after AE is 30th
September 2015
• The relevant pay period is
month ended 5/10/2015
• As Joe’s birthday was before
the start of this tax month, the
period is a full pay reference
period and contributions
should be calculated using the
monthly LEL lower limit and
UEL upper limit amounts
Note: If in the above example, Joe’s birthday was 29th August, the same assessment period would apply and Joe would be enrolled from 29th August.
Contributions would not be calculated for the month ended 5/9/2015 because it is only a part period or put more correctly, the contributions for the
first month (m/e 5/9/2015) are zero.
14. NEST – Groups and payment sources
•NEST Allows different levels of contributions for different sets of employees
• Floor workers set up at 1% and 1%
• Managers straight to 5% and 3%
•Different categories should be attributed group names e.g. floor workers and managers
•If using different bank accounts to pay different groups this must be inputted when setting up
with NEST
•If there are weekly and monthly employees, they will require separate contribution files.
15. BrightPay Functionality
•Regardless of pension provider BrightPay handles
• Assessment
• Communication
• Calculations
•The initial version will prepare NEST enrolment and contribution CSV files
•Enrolment and contribution files for other providers will follow
•However, it should be possible to prepare appropriate reports within BrightPay to assist with
enrolment and contribution responsibilities