Auto Enrolment Services

Auto Enrolment Services

If you are an employer then you will have no doubt heard the term ‘Auto Enrolment’ over the last 12 months, but do you really know what it means for you and your employees? The following tabs will take you through the key considerations and changes that will affect your business, the important dates that action will be required and also how you can ensure that there is an Auto Enrolment solution for you.

A study conducted by National Employment Savings Trust (NEST) found that nearly three-quarters of small and micro-employers intend to seek support with auto-enrolment (AE) from payroll providers. Tim Jones, Chief Executive of NEST, said that AE is not just about pensions, but also about payroll, because that is where the eligibility assessment and calculations are carried out. “A majority of employers deliver payroll in-house and one-third acknowledge that they lack confidence in handling it, so they will need to make payroll a priority if they are to get AE right or turn to an intermediary for payroll support” (Pay & Benefit, 2014).

At PCL we use software that includes three integrated solutions: assessment, communications and e-payslips and P60s. These solutions are updated in line with any changes to the legislation. So you can relax in the knowledge that the information you are provided with is accurate, taking the worry out of compliance.

We work in partnership with our strategic partner, a national firm of independent financial advisers, to provide Auto Enrolment solutions for larger businesses. If you would like to discuss your individual requirement for Auto Enrolment, please contact us and we will arrange a free no obligation joint consultation for you.

What is Auto Enrolment?

Auto Enrolment has been introduced by the Government as a way of addressing the need for a greater number of individuals to begin saving for retirement. Currently millions of workers are not saving enough now to achieve the income they are likely to need in retirement and with life expectancy increasing, the importance of saving is even greater now than ever.

By 2018, every employer in the UK will be required to have a workplace pension scheme which its (eligible) employees will be enrolled into. For large employers, with over 120,000 staff, the enrolment process began in October 2012 and ‘staging dates’ have been introduced so that each employer knows when the requirement has to be met, depending on the number of employees they currently have.

Each workplace pension scheme will have to meet specific Auto Enrolment criteria so it is important that you understand what is required by your business, who will be affected and when you will need to take action.

When will Auto Enrolment be required for my business?

The first thing any employer should do in preparation for these new measures is to find out when your staging date will be, these can be found at:


For business with fewer than 50 employees, your staging date is dependent on the PAYE reference numbers that you use. Some smaller firms will be required to have schemes in place by 1st August 2014, where as others do not have a requirement until 1st April 2017.

It is recommended that you take action 6-12 months before your staging date. In addition it is important that professional advice is sought to ensure you have the most appropriate scheme in place for your employees, as well as meeting the full criteria for a workplace pension. Fixed penalties will be imposed by The Pensions Regulator for firms that fail to do so.

Penalty notices

Penalty notices will be sent to punish persistent and deliberate non-compliance.

A fixed penalty notice will be issued if you don’t comply with statutory notices, or if there’s sufficient evidence of a breach of the law currently fixed at £400 and payable within a specific period.

An escalating penalty notice will be issued for failure to comply with a statutory notice. This penalty has a prescribed daily rate of £50 to £10,000 depending on the number of staff you have.

A civil penalty will be issued for cases where you fail to pay contributions due. This is a financial penalty of up to £5,000 for individuals and up to £50,000 for organisations.

Where employers fail to comply with a compliance notice or there is evidence of a breach, a prohibited recruitment conduct penalty notice will be issued. This penalty has a prescribed rate of £1,000 to £5,000 depending on the number of staff the employer has.

The Pensions Regulator aims to fully recover ALL penalties issued.

Who are the eligible employees?

Each member of staff working for you will fall into a category which will determine whether or not they will be Auto enrolled or whether they will have the right to join or ‘Opt In’.

Workers are either classed as employees working under a contract of employment, or a member of staff who is not employed by a company but may be contracted to perform specific work or services which they are not undertaking as part of their own business.

Workers are then divided into three categories, Entitled workers, Eligible job holders or Non-Eligible job holders. Further details of each of these categories can be found at:


Currently any worker earning over £5,876 per annum must be Auto Enrolled into a workplace pension by their employer.

Staff will have the option to opt-out of the scheme however they will need to be Auto Enrolled again every three years. It will be the duty of the employer to ensure this is reviewed every three years for each member of staff who chooses to opt-out.

As an employer you have a duty to assess your work force and determine which category each employee falls into. You also have a duty to provide relevant information to each worker, irrespective of what category they fall into, and to also understand each employee’s entitlement for access to a workplace pension scheme.

How much will need to be contributed and by who?

The amount of contribution required will be phased in until the total contribution reaches 8% of earnings for each scheme member. This will be reached by a 3% employer contribution, a 4% employee contribution and a further 1% coming from pension tax relief on the employee payment.

The guide for contributions levels is as follows:

From staging date to 5th April 2018
– Employee Pays **: 1%
– Employer Pays: 1%

From 6th April 2018 to 5th April 2019
– Employee Pays **: 3%
– Employer Pays: 2%

From 6th April 2019 onwards
– Employee Pays **: 5%
– Employer Pays: 3%

** less tax relief

What are my Auto Enrolment Options?

Employers will have three main options for Auto Enrolment:

• Adapting an existing scheme to accommodate the new requirements
• Start a new pension scheme which will meet all the set out criteria
• Use Government backed scheme, such as the National Employment Savings Trust (NEST)

The most suitable option for you will depend on the size of your business, the types of worker you employ and what existing arrangements (if any) you or your staff already have in place.

This is one area in particular where advice should be sought as there are certain limitations to the government schemes which may not suit all employees. There are also individual considerations for the suitability of enrolment for some employees, for example those who are close to reaching the Lifetime Pension Allowance with their existing pensions or those who may have applied for Protection on their pension funds would find their Protection revoked if further contributions were to be made.

What other things will we need to consider?

Establishing a workplace pension scheme is relatively straightforward with the correct advice and guidance. However there will be many other issues you will face as a business and these too will need careful consideration. For example;

Employer Contributions – How will these be funded? Could a Salary sacrifice scheme be used? Will you need to increase the staff wages as an incentive?

Payroll Systems – How will you accommodate the changes within your payroll system? Will your systems need to be upgraded? Will we be able to efficiently deal with staff opting in an out of the scheme?

Temporary workers/agency staff/maternity leave – Who will be responsible for enrolling agency employees? Do you need to cater for workers on short term contracts? What will be required for staff on maternity leave?

Each of the above areas could pose a potential obstacle for you and that’s why it’s important that you can discuss your concerns with someone who will be able to explain exactly what Auto Enrolment means for you and design a solution that will work in your business.

To take the first steps towards getting your business ready for these changes please email us at info@payroll-compliance.co.uk with a brief outline of what assistance you feel you may need. Someone will then contact you to advise you of the type of service that can be provided and at what cost.