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Website URL : https://www.acas.org.uk/index.aspx?articleid=4757

Automatic pension enrolment

Under the Pensions Act 2008, every employer in the UK must enrol certain workers into a workplace pension and contribute towards it. This enables them to save for their retirement.

Automatic enrolment for new employers

New employers, or employers taking on staff for the first time, will have automatic enrolment duties from the first day their first member of staff starts working - this is known as their duties start date. Even if an employer thinks they won't need to put their staff into a scheme, they'll still have duties.

The Pensions Regulator has an online tool to help employers work out what they'll need to do and by when. This includes:

  • choosing a pension scheme
  • working out who to put into a pension
  • writing to staff
  • declaring compliance

Automatic enrolment for existing employers

Employers that have already automatically enrolled their staff have a number of ongoing legal duties to carry out each time they pay their staff. These include:

  • Monitor the ages and earnings: Any staff (including new starters) who meet the age and earnings criteria need to be enrolled into a pension scheme that qualifies for automatic enrolment.
  • Manage requests to join or leave your pension scheme: If any eligible staff writes to you requesting to be put into a pension scheme, you must do so within a month of receiving their request. If your staff chooses to leave your pension scheme within one month of being enrolled into one, you'll need to process this within one month of their request.
  • Maintain regular pension contribution payments: Employers need to continue making minimum contribution payments into their workers' pension every time payroll runs. The Pensions Regulator monitors contributions paid into workplace pensions and can tell if payments due are not being made, and will take action.
  • Contribution increases April 2019: From 6 April 2019, the minimum pension contributions will increase - an employer must contribute a minimum of 3% into their pension, and their staff must contribute 5%, which is an overall pension contribution of 8%. For further information see www.tpr.gov.uk/increase.
  • Re-enrolment: Every three years, employers will need to carry out re-enrolment, which include putting certain staff back into a pension scheme and submitting a re-declaration of compliance. Re-enrolment and re-declaration is a legal duty and if employers don't act, they could be fined.

Employers and workplace pensions - key considerations

Employers should:

  • make sure they know what to do and by when: they will have duties even if they only employ one member of staff.
  • work out the costs that may be involved in terms of time and money: it may be less than you think.
  • decide who will complete the tasks that need to be undertaken: while employers can carry out automatic enrolment duties themselves, they may choose to ask a business adviser for extra support. Employers should make sure they understand and agree who will carry out their duties so that nothing is missed.
  • nominate a contact: this is the person The Pensions Regulator will send letters and emails to about their duties, and provide information on what needs to be done and by when.

Worker's right to opt-out

Workers may choose to leave or opt-out of the pension scheme at any time by signing an opt-out form. If any worker opts-out within a month of joining the scheme any money paid in will be paid back to them. If they opt out any later then it will depend on the pension scheme's rules. Normally this will mean it stays in the pension until the worker retires.

The Pensions Regulator

The Pensions Regulator is responsible for ensuring that all employers comply with workplace pension law. It's important that employers understand what they will need to do and the date that the law will apply to them. The Pensions Regulator has guidance and support at www.thepensionsregulator.gov.uk/employers which will help employers comply with their legal duties on time.