This guide will help you understand how you can help your clients meet their legal duties for auto enrolment.
What are the legal duties?
Whether a workplace has one worker or a hundred, they must set up and run a workplace pension.
You’ll need to assess your clients’ workers to see if they qualify to be auto enrolled. If they do, you must enrol them into the pension and their workplace must pay contributions into their pension savings for them.
Tell workers about their pension
You must tell the workers you’re assessing and enrolling them, and what their rights are. now:pensions can produce and send communications for you.
Collect and pay contributions on time
You must collect the workers’ contributions to their pension savings and pay them, along with the workplace’s contributions, into your client’s workplace pension by the 22nd of the month following the month you collected the contributions. This is important as The Pensions Regulator can fine workplaces that don’t comply.
Deal with requests to join or stop paying in
If workers ask to join the pension or stop paying in, you must deal with these requests promptly.
Re-enrol workers
Every three years you must re-assess opted out workers and re-enrol them if they qualify to be auto enrolled.
Keep records
These including members’ personal details, contributions from members and their workplace, and who has opted in and out.
When do the legal duties start?
Auto enrolment duties start as soon as a workplace has workers, even if it’s only one. This is known as the duties start date.
On your clients’ behalf, you must:
- set up a workplace pension
- assess their workers to see if they qualify to be auto enrolled
- enrol any workers who qualify.
How do you assess workers?
You’ll need to check if the workers:
- normally work in the UK
are aged between 22 and State Pension age - earn at least £192 a week, £833 a month or £10,000 a year from one job.
If they do, they’re known as eligible jobholders. You must auto enrol eligible jobholders and their workplace must pay contributions to their pension savings for them.
Workers aged between 16 and 74, earning at least £120 a week, £520 a month or £6,240 a year, are known as non-eligible jobholders. You don’t have to auto enrol non-eligible jobholders but, if they ask to join a pension, you must enrol them. Their workplace must pay contributions towards their pension savings for them.
Workers earning less than £6,240 are entitled workers. If they ask to join a pension you must enrol them, but your client doesn’t have to use their auto enrolment pension for this. They can go into a different pension. The workplace doesn’t have to pay contributions for entitled workers.
What must you tell workers?
- That you’re assessing them for auto enrolment.
- Whether they qualify to be auto enrolled or not.
- That they have the right to ask to join a pension even if they don’t qualify to be auto enrolled.
- That if they are auto enrolled, they have the right to opt out.
- That they’ll be re-enrolled after three years if they opt out or stop paying in.
We send these communications for workplaces that use now:pensions.
What is postponement and how is it used?
Workplaces can postpone assessing workers for auto enrolment up to three months.
This could be useful if, for example, they have workers on short-term or temporary contracts who won’t still be working there after three months or are in their probation. Or, they want to line their auto enrolment dates up with their company accounting and payroll periods.
The date a workplace can postpone to is known as the deferral date.
Postponing auto enrolment doesn’t affect a workplace’s duties start date. If a workplace decides to postpone you must tell all workers, on the workplace’s behalf, that the workplace is postponing assessing them for auto enrolment and what the deferral date is. You must do this within six weeks of the workplace’s duties start date. If any of the workers ask to join a pension before the deferral date, they must be enrolled.
Opting out
Workers don’t have to stay in a workplace pension. If they ask to stop paying in within one month of being enrolled, you’ll need to refund any contributions they’ve paid and treat them as if they’d never been in the pension. This is known as opting out.
Workers who are members of a workplace pension have the right to stop paying into it at any time. But if they ask to stop paying in more than one month after they’ve been enrolled, you don’t need to refund their contributions. Their pension savings stay in the workplace pension until the worker does something with them, such as transferring them to another pension or starting to take the money as retirement income.
What is re-enrolment?
Every three years you must re-assess all the workers who have opted out of your clients’ workplace pensions. If they qualify to be auto enrolled, you must re-enrol them.
They can opt out again. If they do, you must refund any contributions they’ve paid and treat them as if they’d never been in the pension.
What records must workplaces keep?
Workplaces must keep records of how they’ve met their legal duties, including:
- the names and addresses of workers who have been put into a pension
- records that show when money was paid into the pension
- any requests to opt out, leave or join the pension
- the pension’s reference or registry number.
These records must be kept for six years, except for requests to opt out or leave. These only need to be kept for four years.
