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How much do I need to pay into my employees’ pension pots?

If the qualifying earnings basis is being used, the minimum contribution is 8% with at least 3% from the employer on qualifying earnings falling between upper and lower earnings limits of £6,240 and £50,270 a year. These payments are known as ‘contributions’ and are set by the government each year.

Minimum pension contributions have risen in stages starting from 6 April 2018. From 6 April 2019 minimum pension contributions have increased to 8% of employees’ qualifying earnings (3% employer, 4% employee and 1% tax relief).

 

Can I postpone my duties start date and how long can I do this for?

Yes, you can do this for a maximum of 3 months. There are 3 types of postponement. These can be used separately or combined. They can’t be used back to back.

We only need to know about postponement choices if The People’s Pension is being used to assess the workforce.

Staging postponement – an employer can postpone assessing their workforce from their duties start date for up to 3 months.

New starter postponement – an employer can postpone assessing their new starters for up to 3 months.

Eligibility postponement – an employer can postpone enrolling someone who has become eligible for the first time, to cope with spikes in earnings. This makes allowances for those individuals who may only become an eligible employee every now and again and saves the administrative duties associated with frequently changing someone’s status.

What are the basic things I need to do to comply with auto-enrolment?

The auto-enrolment obligations are set out in legislation and The Pensions Regulator is responsible for ensuring compliance with the auto-enrolment legislation. So, it’s a good idea to make yourself aware of your basic responsibilities.

You must:

  • Put employees into a pension scheme and pay into their pension pots
  • Provide a declaration of compliance to the Pensions Regulator for the pension scheme every 3 years
  • Keep details of all opt outs for 4 years
  • Keep specific records for each employee for 6 years.

What’s re-assessment and how often do I have to do it?

After you’ve assessed your employees for their auto-enrolment status at your staging or duties start date, you then must monitor their age and earnings for each subsequent Pay Reference Period. They may trigger the requirements to become assessed as eligible and will therefore need to be auto-enrolled. You don’t need to re-assess any eligible employees who’ve opted out, apart from when you re-enrol.

How and where do I send details of my employees’ contributions?

You’ll need to calculate, deduct and pay employees’ contributions, as well as employer contributions on their behalf into the qualifying pension scheme. Most payroll providers’ software is geared up for auto-enrolment, so all you’d need to do is extract the data file and submit it via a secure portal to the pension provider.

What do I have to do after I’ve enrolled employees?

Once you’ve successfully enrolled your eligible employees and the joiner information has been sent out, there are duties that you’ll be required to fulfil on an ongoing basis such as uploading your payroll files to pay contributions. You’ll also need to manage employees who join and leave, and those that opt in and opt out.

And every 3 years, you’ll need to re-enrol anyone who has opted out, ceased active membership or is paying below the minimum contribution levels and is an eligible employee. You’ll also need to re-declare your compliance every 3 years – even if you have no one to re-enrol.