AON | Auto-enrolment solution
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You're probably aware that the law on workplace pensions has changed. All employers are now legally required to automatically enrol certain staff into a pension scheme and make contributions. You will also have to tell your staff about the scheme you put them in.
If you have employees aged between 22 and the state pension age and earning more than £10,000 per year, you will be required to automatically enrol them into a compliant pension scheme. You should have already been notified about your staging date by the Pensions Regulator.
Avoid the fines!
Failure to offer a compliant pension scheme in time for your staging date can result in daily fines from £500 to £2,500 and many pensions providers are either already too busy, require a lengthy lead-in time, or do not see value in supporting the SME market.
If your staging date is coming up soon, the above fines may make you panic, this is where we come in. Aon has developed our own off-the-shelf auto-enrolment solution containing a fully compliant pension scheme and tools to help you get it right. It’s called Littleblue2go. What's more, ICAS members will receive a 10% discount.
To sign up for Littleblue2go and take advantage of your discount go to www.getlittleblue.com and enter the discount code AONICAS16.
Your auto-enrolment FAQs answered
Clare Abrahams answers your questions on auto-enrolment
The law on workplace pensions has changed. All employers are now legally required to automatically enrol certain staff into a pension scheme and make contributions. Aon Employee Benefits answer some frequently asked questions on the new scheme.
As an employer, if you haven't already, you can expect in the near future to receive correspondence from The Pensions Regulator (TPR) reminding you of the new regulations and to confirm your Staging Date, the date from which your automatic pension enrolment responsibilities come into effect. If you are unsure of the date allocated to you, you can check it by visiting www.tpr.gov.uk/staging-date and entering your PAYE reference. There's more to the law than might first meet the eye. As such, we highlight some of the key points below:
Who do I have to enrol?
Anyone who is aged between 22 and the state pension age and who earns more than £10,000 per annum must be automatically enrolled in a qualifying pension scheme. For employees who fall into this category, there is a statutory minimum contribution structure. This contribution structure will increase with time, starting low to encourage saving, but recognising that the lower contribution rates are unlikely to be sufficient to ensure most workers have adequate provisions for their retirement income. Where an individual doesn't meet the criteria for auto-enrolment, they may still need to be offered the chance to join the pension scheme and, as an employer, you may still be required to contribute. If in any doubt, it's recommended that you read TPR’s guidance on defining the workforce to confirm who is considered to fall under your duties and take legal advice if necessary.
What are the minimum contribution levels?
The table below shows the minimum percentages of an employee’s salary that must be put into the pension scheme by the employers and employee initially. In addition, the tax man will also contribute in the form of tax relief, the format of tax relief depending on the design of the scheme. The levels below reflect the statutory minimum contributions only: Minimum in respect of: Before April 2018 Until Aapril 2019 Post April 2019 Total (Employer and Employee) 1% 3% 5% Employer 1% 2% 3% ~minimum contribution levels may be higher depending on the design of the scheme and, in particular the pensionable salary definition.
What about postponement and opting out?
If you don’t want to start making employer contributions immediately, you do have the option to postpone. This will defer the automatic enrolment of relevant employees by a maximum of three months. However, during this time you will still need to communicate to your employees what’s happening and that you have opted to use postponement. You will also need to inform them about their right to opt in during this time if they choose to. Employees who are not eligible can also opt to join the scheme and may be entitled to the minimum contributions too. If any of your eligible employees don’t want to join the pension scheme, they are entitled to ‘opt-out’. The responsibility for doing this falls on the employee who will need to contact the pension provider directly (or in some cases a third party authorised on their behalf). As an employer you will need to let them know that in the future they may be automatically enrolled back into the pension scheme, and again, if they want to opt-out, they will again need to take the appropriate steps to do so.
What are the penalties?
TPR takes failure to comply with auto-enrolment criteria very seriously. Enforcement action starts with statutory notices and is followed by penalty notices. Further non-compliance may result in court action. An initial fixed penalty of £400 could apply and may be followed up by daily penalty (£500 for employers with between 5 and 49 workers). For more serious offenders it could ultimately result in a jail sentence. It is important to plan ahead and ensure you have all the steps in place to be compliant. TPR encourages employers to take action at least 6 months in advance of Staging Date. There's a lot to do and you need to make sure you have enough time to source an appropriate pension scheme, seek appropriate specialist advice and ensure payroll processes and systems are thoroughly tested in advance of your staging date.
Aon’s Littleblue 2go has been designed to provide an all-in-one solution containing a compliant pension scheme, an interactive planning tool and the required communications to get you through the process.