Blogs/Vlogs

Auto-enrolment: the pace quickens

2 May 2017

In January, the Pensions Regulator (TPR) published its latest update and predicted that 2017 was to be a key year for the roll out of automatic enrolment. Up to 700,000 employers will reach their staging date in the current year – the highest number since auto-enrolment (AE) began in October 2012. This number includes new employers that first employed a worker between 2 April 2012 and 30 September 2017, who will reach their staging date between May 2017 and February 2018.

Re-enrolment

Some medium-sized employers will now be in their third year of auto-enrolment and therefore need to enrol those employees who opted out originally.  In essence, this will be a repeat of the exercise carried out three years ago, and includes a re-declaration with some voluntary exceptions that are part of the simplification of AE employer duties.  You’ll have three months either side of the third anniversary of your staging date in which to choose your re-enrolment date. Note that you must have the same re-enrolment date for all staff you have to re-enrol and that there is no postponement at re-enrolment.

Re-declaration must be with the Pensions Regulator within five months of the third anniversary of the original staging date – not the re-enrolment date.

New employers

New employers from 1 October 2017 onward will have immediate AE duties, starting on the contract start date of their first worker.

Progress report

TPR has also reported that by the end of December 2016 over 370,000 employers, with a total workforce of 24 million, had completed their declaration of compliance and that 7.2 million people have now been automatically enrolled.

Apparently there remain a number of misunderstandings among employers, especially over those employees who are exempt from auto-enrolment. These include:

  • directors working under an employment contract who are not the sole employee;
  • LLP partners who are not regarded as ‘salaried members’ under HMRC tax rules;
  • people who are working their notice period;
  • individuals who have ceased active membership of a qualifying pension in the previous 12 months; and
  • people with HMRC tax protected status for their pension savings.

TPR is keen to point out that while enrolment of these individuals is optional, all of the other duties remain unchanged. Apart from those working their notice, these individuals retain the right to ask to join, in which case the employer is obliged to enrol them.

Those employers who don’t have to enrol all of their staff are still obliged to send the normal statutory letters and emails and to make a declaration of compliance at the usual time. In other words, auto-enrolment affects nearly every business with employees and if it hasn’t yet affected you, this year it will.

We are holding an 'Auto-enrolment Breakfast Briefing' on Thursday 18  May from 8am – 9am and welcome those companies which do not yet have an auto-enrolment pension scheme in place as well as those which already have a scheme and are interested in gaining a broader appreciation of their legal obligations and the options that exist to improve their systems. Please click here for more information and to register.

If you have any questions about auto-enrolment, please contact me or your usual UHY adviser.

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