Auto-Enrolment

Employees will be eligible for automatic enrolment if:

• They are not a member of an equivalent pension scheme
• They are aged between 22 and the State Pension age
• Their income is above £7,475 gross a year

Employees who satisfy these requirements must be automatically enrolled into a qualifying pension scheme.

To help achieve this goal, employers will be placed under a number of legal obligations to automatically enrol employees into a compliant qualifying scheme which meets the Auto - Erolment regulations. 

Any current schemes that do not meet the new criteria will need to be amended or restructured to ensure compliance. If no scheme is in place, employers must create a new qualifying scheme or enrol eligible employees into the default NEST scheme. All of the new employer obligations will be enforced by The Pensions Regulator and employers who do not comply will face enforcement action.

The DWP (Department for Work and Pensions) is taking employer compliance very seriously. The Pensions Regulator has been given the scope to police employers who will face hefty penalties for failure to comply with their duties.

The Pensions Regulator will firstly issue compliance notices to employers where they are found to be in breach of any of the auto-enrolment regulations. If they do not comply by rectifying the breach, The Pension Regulator will initially issue a fixed penalty of £400.

If the employer still fails to comply and/or persistently does so, The Pensions Regulator can issue an escalating penalty notice which increases daily and will only stop increasing when the breach is sorted out to the Regulator’s satisfaction.

The penalties will be scaled based on an estimate of the amount of jobholders affected by the breach. Where any breach is in respect of unpaid contributions, the actual amount of jobholders will be taken into account, where available, and the penalty scaled accordingly. In addition to any penalties, The Pension Regulator will have the power to demand that the unpaid contributions due, plus interest, must be paid by the employer.

The Pensions Regulator plans to use the information that employers are required to give them and the pension provider to detect possible breaches and can investigate cases where employees ‘whistle blow’.
It is worth noting that these penalties can be applied where employers fail to comply with any aspect of the regulations – for example, failing to:

• provide the statutory information to jobholders,
• provide information to the scheme provider or scheme trustees,
• auto-enrol and re-enrol eligible jobholders
• keep adequate records

Or else...

It’s also worth noting that:

• Jobholders aged at least 16 but who are not yet 22 with earnings of more than £5,715 a year can ask to be enrolled into the scheme and their employer will have to make the minimum contribution
• Jobholders aged at least State Pension Age but who are under 75 with earnings of more than £5,715 a year can also ask to be enrolled into the scheme and their employer will also have to make the minimum contribution
• Workers aged at least 16 but who are under 75 and who do not have earnings of more than £5,715 can ask to enrol in to the scheme, the employer can choose to make the minimum contribution but does not have an obligation to do so.

If you have any questions please conact us to speak to an adviser or alternatively use our call back service and one of our advisers will call you back to discuss your requirements. If you would like a copy of our New Penions Reform Guide then please complete your details to the right and download your free copy.