Workplace Pensions. Automatic enrolment rates 2014/15. Weekly Fortnightly Four-weekly Monthly Quarterly Half yearly

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1 Workplace Pensions All employers will have to provide workers with a workplace pension scheme by law over the next few years. The biggest employers started doing this in October, This is called automatic enrolment. When your business must start doing this (called a staging date) depends on how many people you have on your payroll. Check your staging date with The Pensions Regulator. If you don t already offer workers a workplace pension scheme, you must set one up before your staging date. If you already have a workplace pension scheme, you may be able to use your existing scheme to discharge your automatic enrolment responsibilities. The scheme will need to be certified, and be aware that different criteria exist depending on the type of fund. You must enrol into the scheme all workers who: are aged between 22 and the State Pension age work in the UK meet the payroll criteria as follows: Automatic enrolment rates 2014/15 Weekly Fortnightly Four-weekly Monthly Quarterly Half yearly Automatic enrolment earnings trigger 10,000 Qualifying earnings band lower limit 5,772 Qualifying earnings band upper limit 41, ,499 4, ,443 2, ,611 3,221 3,489 10,467 20,933 As of April 6, 2014, once you have entered a staging date in your company information for workplace pension s automatic enrolment, your employees are automatically assessed on each payroll payment after that staging date unless your settings indicate they should not be assessed. When The Pensions Regulator has advised you of a staging date, you will need to complete the following tasks in QuickBooks: Enter your staging date in your company information at Company > Company Information. Create a payroll item for employee pension contributions and a payroll item for an employer pension contribution at Lists > Payroll Item List. Note: Tick the Is the pension a qualified scheme? checkbox during the payroll item creation process. If you have an employee who does not work in the UK, or, if you have already gone through the automatic enrolment process in an earlier version of QuickBooks or another software, edit your employees information manually as needed, otherwise QuickBooks will do so automatically when you pay the employees and the dates may then be incorrect. Do this on the new Pension tab of the employee s profile at Employees > Employee Centre. View details of an employee s pension assessment and take action if required, for example to enrol or postpone enrolment for an eligible job holder, during the payroll payment process in the new Pension Status column of the Review and Create Payroll Payments window.

2 If an employee is assessed as qualified during the payroll payment assessment process but wants to opt out, or does not qualify but wants to opt in or join, make these changes on the Pension tab of the employee s profile at Employees > Employee Centre. More detailed information and assistance is available for each of these tasks in the related Help. If you have not yet been advised of a staging date and/or you have questions around workplace pensions and auto enrolment, and what they ll mean for your business, below you ll find more general information about that as well as some details about the things you ll need to understand and do, outside of QuickBooks, before you have to comply with those new regulations. This is not an exhaustive guide, but is meant to provide a brief overview. Note: Intuit is not certified or qualified to provide pension advice. Please seek professional advice. About workplace pensions Workplace pensions, auto enrolment, and staging dates are all terms that are becoming more familiar, but what do they actually mean, and when will businesses need to take action? Previous governments have tried before to encourage employees, specifically those in the low to moderate earnings group, to save for their retirement. The most recent attempt was the Stakeholder pension schemes which were introduced in The previous attempts required the employee to take action to join their employer s pension fund. Due to inertia, there were low take up rates by the target group. Under Auto Enrolment, all employees (subject to age and earning criteria) will be automatically enrolled into a qualifying pension scheme. The employee will have to formally opt out if they do not wish to join. There are also rules about the levels of contribution, pensionable earnings, and the types of communication that need to be sent to your employees at various times. It is possible to use an existing pension scheme to discharge your automatic enrolment responsibilities. These schemes will need to be certified, and be aware that different criteria exist depending on the type of fund. What is automatic enrolment? Automatic enrolment, or workplace pensions, is the new pension regulations that are being phased in between October 2012 and February The new pension rules apply to all employees, permanent and temporary, whom you report under your PAYE scheme. Staff must be assessed to determine the worker category they fall into, which determines whether they need to be automatically enrolled into a qualifying pension scheme. The worker category also determines the type of communication that must be sent to the employee. The date you will be required to comply with this legislation is called the staging date. You may delay the staging date by up to 3 months. Only qualifying pension schemes can be used to discharge your employer obligations with regards to auto enrolment. You can choose to simply make membership to a qualifying pension fund a condition of employment for all employees and negate the need to continually assess your work force and apply the automatic enrolment rules. Your qualifying pension fund will need to comply with the earnings base and total contribution rates as defined in the regulations. As an employer, you can choose to pay more than the stated percentage but you cannot pay less. When budgeting for the financial impact this will have on your business, you will need to take into account that the contribution percentages are being increased in 3 stages. Staging date This is the date that you will have been advised by The Pensions Regulator from which your automatic enrolment duties will apply. The staging dates are based on the total number of employees in a PAYE scheme on 1 April, 2012.

3 Notes: If your business has multiple PAYE schemes, then you must check the staging dates for all PAYE refs. The earliest staging date will determine the staging date for the business. If your PAYE scheme has less than 50 employees, you may postpone your auto enrolment duties. Be sure to let The Pensions Regulator know, otherwise they will expect you to register your fund details with them in line with your original staging date. If you re not sure of your staging date, use the tool on The Pensions Regulator website to obtain this, at You ll need your PAYE reference to hand. Employers with fewer than 50 employees at 1 April, 2012, as well as those companies who registered with HMRC as employers after 1 April, 2012, have the option to defer their staging date. You will need to advise The Pensions Regulator if you intend to make use of the new dates. Further details can be obtained from the TPR website. Postponement You may choose to postpone auto enrolment by up to 3 months. You can use postponement in the following circumstances: Staging date You can postpone your entire payroll or groups of employees When an employee joins Use postponement to align with employee s probation period or to align a mid-month starter to the beginning of the pay reference period Seasonal workers When an employee becomes eligible for automatic enrolment Categories of workers There are different categories of workers against which your employees will need to be assessed. The employees will need to be assessed at staging date and again every time you pay them. The category that a worker falls into will determine the action that is required in terms of correspondence, pension deduction and employee contribution. The categories of workers are: Entitled workers Have a right to join Employer is not obliged to make a contribution Job Holders o o Eligible Job holders Must be auto-enrolled Employer must pay a contribution Non-eligible Job holders Have a right to opt-in Employer must pay a contribution The 2 main categories of worker for which the employer duties apply are job holders and entitled workers. Category Age Earnings Is working or ordinarily < SPA SPA 74+ Has Has Qualifying Has Qualifying works in the -74 Qualifying Earnings Earnings UK below trigger above trigger

4 Job holder (this is split into eligible and non-eligible) Eligible Job holder Earnings for AE for AE Non-eligible Job holder (falls into one of these categories) Entitled Worker Qualifying earnings These are the earnings that are used to determine the category of an employee. The definition of qualifying earnings in terms of automatic enrolment includes: salary, wages, commission, bonuses, overtime, SSP, SMP, OSPP, ASPP and SAP. The earnings are assessed in the period they are paid, and not earned. In some instances, you will need to use reasonable judgement when determining which earnings are deemed qualifying or not. For example, a car allowance could be either, depending on the circumstances as follows: Qualifying earnings Executive who gets a car allowance as part of annual package Not qualifying earnings Where an allowance is considered a tool of the trade, for example a travel allowance paid to a salesman who undertakes business travel using his private car. Trigger for auto enrolment The fact than an employee has qualifying earnings does not necessarily mean they must be auto enrolled. The qualifying earnings need to be above the trigger for auto enrolment. Pension schemes Pension schemes need to satisfy various criteria in order for them to be considered a qualified scheme. You will need to check with your pensions advisor as to whether your existing pension plan meets the criteria for a qualifying scheme. Note: In some instances the automatic enrolment rules and the pension scheme rules differ, for example in the definition of pensionable earnings. There are also instances where the scheme rules override the auto enrolment rules, for example regarding schedule of payments and part deductions. Communications to employees Communications must be sent out to employees at various stages of the process. Your pensions advisor can help you with this. You should also be aware that you will still need to communicate to employees who are already members of existing schemes at the time of the first assessment. Registering with The Pensions Regulator (TPR) You are required to register with The Pensions Regulator and log details of the pension schemes you are using to comply with your automatic enrolment duties. You will also need to re-register these details every 3 years.

5 You will be able to use your Government Gateway credentials to log into the TPR website. You will need your 10 digit code as quoted on the TPR letter when you register. Note for agents: TPR is investigating ways for bureaus to advise/input information on behalf of their clients. Further information can be found on the TPR website.