The Workplace Pension

Automatic enrolment has begun. You have new legal duties to automatically enrol certain workers into a qualifying workplace pension scheme and make contributions towards it. Use our guidance to help you prepare for the new duties and to set up and run your pension scheme.

You must automatically enrol certain members of your workforce into a pension scheme and as an employer you will need to make a contribution towards it.

The law came into force for large employers from 2012 and we are now seeing smaller employers having to meet their obligations.

Even if you already offer pension arrangements for your workers, you’ll still have some new obligations to meet.

What do I have to do?

The main things you must do are:

  • provide a qualifying scheme for workers
  • automatically enrol all eligible jobholders onto the scheme
  • pay employer contribution for eligible jobholders to the scheme
  • tell all eligible jobholders that:
    • they have been automatically enrolled and
    • they have the right to opt out if they want to do so
  • register with The Pension Regulator (TPR) and give them details of your qualifying scheme and the number of people that you have automatically enrolled.

The new laws surrounding workplace pensions

Changes to pensions law gives employers new duties in relation to their workforce

Who does this apply to?

As an employer, you’ll have new duties in relation to everyone working for you:

  • who is aged between 16 and 74
  • who works in the UK
  • for whom you deduct income tax and National Insurance contributions from their wages.

Your duties depend on the ages and earnings of your staff on your staging date?

Who should be automatically enrolled?

Automatic enrolment is the main employer duty under the new laws on workplace pensions. It’s called automatic enrolment because employers will need to enrol certain staff into a pension scheme ‘automatically’, without those staff having to do anything.

You must automatically enrol everyone working for you:

  • who is aged between 22 and state pension age
  • who works in the UK
  • for whom you deduct income tax and National Insurance contributions from their wages
  • who is likely to have gross earnings over  £10,000 in a year.

Your minimum employer contribution

You will have to make regular payments into the pension schemes of all staff who you automatically enrol and all those who choose to opt in.

The law has set a minimum level for employer contributions. To work out the minimum amount you’ll have to pay for an individual staff member, you’ll need to know their gross earnings, include salary, wages, commission, bonuses, overtime, statutory sick pay and statutory maternity, paternity and adoption pay, so it’s important you know what we mean by this.

Compliance and enforcement

The Pensions Regulator’s (TPR’s) goal is to ensure that you understand your duties and are in a position to carry them out with their help and guidance. The responsibility for complying will rest with you the employer.

TPR recognises that most employers will want to do the right thing for their workers. The regulator’s overall approach is to educate and enable you to comply with the legislation. Their approach puts you in a position to make the right choices and decisions. However the responsibility for complying will rest with you the employer.

TPR will promote good compliance behaviour among employers by ensuring that the legislation is being applied fairly and that those who do not comply will face enforcement action in line with their risk based approach.

TPR will be firm but fair to non-compliant employers. However, if you have chosen to ignore your obligations they will use their powers where necessary to ensure compliance.

Their enforcement decisions can be challenged by requesting a review and, if still dissatisfied, in certain circumstances an appeal to the First-tier Tribunal can be made against the decision.

TPR shall carry out their work within the better regulation principles to ensure they regulate in a way that is proportionate, accountable, consistent, transparent and targeted.

Strategy and policy

Their compliance and enforcement strategy explains their regulatory approach to maximising compliance with the new employer duties, safeguards, and associated legislation such as maintaining contribution flow into schemes. The compliance and enforcement policy sets out how they will consider and apply their powers, and what employers can expect from them. The compliance and enforcement quick guide summarises the strategy, regulatory approach and the powers available to them to help maximise compliance.

In their policy, they explain how their information and intelligence unit will detect non-compliance and apply a risk assessment process to prioritise matters that may result in an investigation case or enforcement action.

They will explain what happens to cases that are referred to their Information and intelligence unit.

It includes an inspection leaflet and template, a statutory request for information leaflet and template, and a review template.

For more comprehensive details on Personal Accounts, please visit http://www.thepensionsregulator.gov.uk/

If you would like to know more about how Jigsaw can help you benefit from the introduction of the Workplace Pension please take advantage of our FREE no-obligation review and analysis by contacting us here.

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