Guide to Automatic Enrolment 1
Automatic Enrolment (or Auto Enrolment) is Government legislation that requires all UK employers to provide their employees with access to a Workplace Pension. You may have seen the We re all in adverts featuring Karen Brady, Theo Paphitis and Nick Hewer on posters, billboards or the TV like the one below, or heard it on the radio. 2
So why introduce Automatic Enrolment? The UK has an ageing population and with people living longer, the Government has concerns that not enough people are saving for their future retirement aspirations. Workplace Pension Reforms will enable employees to start saving but all the responsibility and administration of automatic enrolment will be with the employer to comply. 3 As an employer, it s your responsibility to make a minimum contribution to your employees pension starting at 1% and increasing over time to 3% by 2018.
What happens if you ignore it? The Pensions Regulator has a range of enforcement options with fixed penalties of 400 and escalating penalties with a daily rate of 50 to 10,000 depending on your number of staff. Like all new legislation, Automatic Enrolment sounds complicated (and potentially costly if you get it wrong) but we re committed to making it easy for businesses with 1-15 employees to get prepared using our low-cost and simple-to-use Sage One Payroll software http://uk.sageone.com/payroll/ 4 It s our mission to be the online payroll solution for simple and supportive Automatic Enrolment that small and micro businesses, accountants, bookkeepers and IFA s rely on and recommend.
What do you need to do? The date your business needs to start complying with Automatic Enrolment is known as your Staging Date and is based on the number of employees in your PAYE scheme at 1st April 2012. Businesses with 30 employees or fewer will start to be phased in from 1st June 2015 and over the next two years it s expected that 1.3 million small and micro businesses will start Staging. The Pensions Regulator will write to you and inform you the date you must start complying with automatic enrolment. However, they also recommend that you spend 9-12 months preparing prior to your Staging Date so if you re a small or micro business you should be getting prepared now. You can check your Staging Date online by using The Pensions Regulator Staging Date Tool at http://bit.ly/stagingdatetool (note: you will need your PAYE reference which can be located on a P6 / P9 coding notice. It can also be found on your white payslip booklet, P30BC). 5
What if your business was set up after April 2012? If you set up your business after 1st April 2012, The Pensions Regulator Staging Date Tool may not be able to provide you with your staging date. If this is the case, The Pensions Regulator provides further guidance on their website at www.thepensionsregulator.gov.uk/employers/exceptions.aspx For example, if the date PAYE first became payable to HMRC fell between 1st April 2012 and 31st March 2013, your staging date will be 1st May 2017. 6
You have your Staging Date, now what? Once you have your date, sign in to Sage One Payroll online at https://app.sageone.com/login and enter the date in the Auto Enrolment / Pensions box on the right hand side of the Payroll Summary page shown below. Click the Set Staging Date button and Sage One Payroll will automatically create a countdown showing you how long you have left to get prepared in months and days. This serves as a useful reminder every time you login. 7
Can you move the Staging Date for your business? Bringing your staging date forward All employers are allowed to bring their staging date forward but you must inform The Pensions Regulator no later than one month in advance of your new staging date. For more information on bringing your date forward visit The Pensions Regulator website at www.thepensionsregulator.gov.uk/employers/bringing-your-staging-date-forward.aspx Postponement You can postpone automatic enrolment for up to 3 months but it does not change your staging date. You may choose to postpone where you wish to align your auto enrolment duties to your existing business or payroll processes. For more information visit www.thepensionsregulator.gov.uk/employers/postponement.aspx 8
Preparing for Automatic Enrolment in 4 easy steps Once your Staging Date has been added to the Payroll Summary page in Sage One Payroll, click on the Prepare for automatic enrolment button and you ll be asked to complete four simple steps: 1 Nominate pensions contact Under automatic enrolment legislation, you must nominate a pension contact for correspondence from The Pensions Regulator. 2 Assess your workforce To identify the impact of the new pension legislation on your workers, you should assess them now to determine which Worker Category they fall into. Categories are Eligible Jobholder who must be automatically enrolled in to your pension scheme; Non-Eligible Jobholder who has a right to opt in or those who are Entitled Workers who have a right to join. In Sage One Payroll, your employees are automatically assessed each time you run a payroll to ensure that the correct pension contribution is taken from their salary. 3 Review pension arrangement Pension schemes must pass certain qualifying criteria to meet automatic enrolment requirements. You can add a new pension scheme to Sage One Payroll or choose from the following three pension providers that specialise in pension schemes for micro businesses: NEST (National Employers Savings Trust) NOW Pensions The People s Pension Please note: Sage is unable to arrange a pension for you or put you directly in touch with pension providers as these are regulated investments. We do not endorse, promote or recommend any pension providers or products and our reporting also works on the basis that you have independently established a pension scheme with a suitable provider. 4 Communicate Auto Enrolment changes to your employees Once your pension scheme has been set up, you re legally obliged to inform your employees of how automatic enrolment will impact them. You also need to keep records for up to 6 years. You can print out or email advance notices of auto enrolment to your workforce from within Sage One Payroll either all in one go, or individually per employee. 9
Adding a new pension scheme to your payroll To add a new pension scheme (step 3 above), go to the Pensions tab and click on the Add a new pension button. You can then choose from the three default pensions that are already listed in Sage One Payroll (NEST, NOW Pensions or The People s Pension) or create your own. You then have the option of editing: How much is being deducted from your employees Whether it is a percentage or fixed amount If it applies to Pensionable Pay, Qualifying Earnings or Custom Earnings If it s deductible before or after tax The payment due date If it s the default plan for all eligible employees on your payroll 10
Adding a pension scheme to an employee Once a workplace pension is in place and you have reached your Staging Date, add it to an employee the next time you process a pay run by following these steps: Start a pay run as normal Enter the salary amount Hover over the Add Deduction dropdown and choose Add a new Workplace Pension Choose from the available pension schemes already added The Employer Pension Contribution and Employee Pension Contribution will then appear on the Confirm Pay screen, payslip and detailed report At the bottom of the Completed Pay Run screen you can also: View Pension Contributions for this pay period and View Pension Contributions to date 11
Need more help? If you re already a Sage One Payroll user, take a look at the help articles on our Online Help Centre at: http://help.sageone.com/uk/payroll/automatic-enrolment.html Our free 24hr telephone and email Customer Support Team are also on hand if you re still unsure and need help getting prepared. The short video below also shows you just how easy it is to prepare for Automatic Enrolment of Workplace Pensions in Sage One Payroll. If you re not yet a customer, Sage One Payroll costs just 5, 10 or 15 + VAT per month (for the 5, 10 or 15 employee version). Sign up for a free 30 day trial now at http://uk.sageone.com/payroll/ 13
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