Step 1: finding your Staging Date
You’ll need to know your company’s Staging Date, which is based on the number of employees you had in April 2012.
Don’t worry if you don’t have the date to hand; there’s a tool on the Pension Regulator Website, or My Auto Enrolment can find it for you, using your PAYE reference.
To get started, we’ll help you understand your Staging Date, and register a point of contact with the Pensions Regulator.
- Do you have more than one PAYE scheme?
- Should you consider bringing your date forward?
- Who should be your Pensions Regulator contact?
Tip: the main advantage of bringing your Staging Date forward is if it would help you to align it with another business date.
Step 2: should you postpone?
It’s possible to postpone your auto enrolment obligations – for some or all of your staff – for up to three calendar months after your Staging Date. The question is, should you?
You shouldn’t use postponement to avoid your duties in the long term, but it can help you align your payroll processes, stagger assessment, and give you a chance to assess workers at the best possible time.
We’ll give you some working examples, help you understand what’s best for you, and give you the letter content you’ll need to keep employees informed.
- How does postponement affect hourly paid, zero-hour contract, temporary and agency staff?
- Does anyone have a seasonal spike in wages?
- How will you tell your employees about your decision?
Tip: if you don’t tell employees within six weeks of your Staging Date, you won’t be able to postpone. If that means you breach the rules, you’ll be eligible for backdated contributions... and possibly a fine.
Step 3: assessing your workers
A Department of Work and Pensions Survey said this is the most crucial part… and also the one employers find most complex.
The process of working out who should be enrolled, and who shouldn’t, can be time-consuming and potentially tricky. The terminology doesn’t help; for example, non-eligible jobholders can still choose to opt in to your scheme.
For some workers it’s relatively straightforward; but where there are variable earnings and contract types, work done overseas or a variety of ages, mistakes can creep in.
My Auto Enrolment will save you time and worry by assessing all your employees – including non-standard staff – automatically.
Three types of employee:
Eligible jobholders must be enrolled into your workplace pension when it starts
Non-eligible jobjolders can choose to opt in, and you have to tell them about it. If they do, you’ll have to pay an employer pension contribution for them.
Entitled workers can also choose to opt in, and again you have to inform them. But you don’t have to make employer contributions.
It wasn’t easy initially to understand what the different ones were. It is slightly confusing in the initial stages to call people non-eligible when actually they are eligible. That took some getting to grips with.”*
– Employer, health and social care, 62-89 workers
Step 4: calculating pension contributions
Even when you know who to include in the scheme, working out your calculations isn’t easy. You might use Qualifying Earnings, which include overtime, bonuses, and pay for things like sickness and maternity leave – or choose to certify that your scheme meets the minimum standard.
To help you choose, My Auto Enrolment will automatically create a cost comparison for you, and show you how the picture changes as the levels increase to 2018 and beyond… and you’ll be able to print out the workings for your compliance file.
- Which definition of pensionable earnings do you want to use?
- Do you want to stick to the minimum contribution, or offer more?
- Will you offer your workers a salary exchange option?
Tip: salary exchange has potential benefits for worker and employer alike... but it can’t be automatic, so introducing it alongside auto enrolment can be confusing unless you communicate well.
Step 5: choosing the right pension scheme
If you already have a workplace pension, you might be able to use it to fulfil your auto enrolment duties – but in many cases, it’s not suitable.
Many businesses choose a Public Service Obligation Scheme (or Master Trust) because they’re relatively quick to set up, have low management costs and must accept you – but traditional insurance company schemes tend to have many more investment options for staff on higher incomes.
At many companies, the staff implementing auto enrolment have no pensions experience, and often any time spent researching competing schemes as a distraction from the day job*.
My Auto Enrolment will help you make good choices and fulfill your obligations quickly, by automatically comparing costs and charges based on your employees… and you can choose to set up the scheme yourself or, for an additional cost, let us do the donkey work for you.
- Is your existing workplace pension scheme suitable for automatic enrolment?
- Do you want to consider insurance companies alongside Public Service schemes?
- Which of the schemes available offers the most competitive charges?
Tip: some companies simply go with the best-known Public Service Obligation Scheme, NEST... but there are three other options, and it’s worth looking at them all.
Step 6: communications and compliance
Making the right decisions about your auto enrolment pension is important – but keeping good records and communicating well is vital. And your duties don’t end when the scheme starts.
You need to assess every new employee when they start, keep track of employees opting in and out, and re-enrol everyone every three years. You also need to send the Pension Regulator your Declaration of Compliance, and keep detailed records.
We’ll speed the process by putting all the letters – and our assessment tool – at your fingertips, listing all the relevant staff, and giving you key reminders to keep you up to date. You’ll be able to download and keep records at every stage, and access detailed advice on updating workers’ employment contracts.
Managing opt-ins and opt-outs
- Depending on their age, it’s likely that between 12 and 23%* of your employees will opt out of your auto-enrolment scheme.
- Employees opting out need to contact the pension provider direct.
- If employees have a right to opt in, you must notify them within one month of them satisfying the criteria.
Tip: it is essential that you have no involvement whatsoever with an employee’s decision to opt out and no participation in their request for an opt-out notice from the pension provider.