All you need to know about Automatic Enrolment & How RLTP Accountants in Derby can help
Updated 23rd October 2019
The law on workplace pensions has changed. Under the Pensions Act 2008, every employer in the UK must put certain staff into a pension scheme and contribute towards it. This is called Automatic Enrolment. Whether you’re a hairdresser, an architect or employ a personal care assistant, if you employ at least one person you are an employer and you have certain legal duties. At RLTP Accountants in Derby, we can help you set up a pension scheme, and keep you on track with on going compliance, as part of our payroll services.
All UK employers have a legal responsibility to automatically enrol staff into a workplace pension, if they meet certain criteria. You will be required to offer a pension scheme from the first time you pay your staff. You can elect a postponement period of up to 3 months, but if a member of staff asks to join the scheme before the end of the postponement period, you must enrol them.
Employees will be automatically enrolled if they are aged 22 and over, but under state pension age. They must also earn more than the trigger, which is currently £10,000 a year. This figure is subject to review each year, but hasn’t changed for the last 3 years. If an employee earns less than £10,000 in a year they may opt in. Likewise, if they earn over £10,000 and are automatically enrolled, they have the option to opt out. As an employer, you cannot encourage the employees to opt out.
Pension contributions could either be calculated on banded earnings, or total gross earnings. This usually depends on which company you use for your pension scheme, but for some you can specify which calculation method you would like to use. The banded earnings limit is currently £6,136, again this is subject to review each year. The minimum contributions for an employer is be 3.0% of your employees banded earnings/total gross. Your employee’s minimum contribution is 5.0%, making total contributions 8.0%.
There are many different providers of Automatic Enrolment schemes. It is worth looking at the cost of these schemes to both you the Employer, & your Employees. There are also different levels of admin support. Some schemes require you to write to your employees, and some will write to them for you.
If you would like us to help you with Automatic Enrolment contact us here.
