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Employers' Legal Obligations Under Auto Enrolment

As 2016 draws to a close and 2017 beckons many SME employers are waking up to the reality of auto enrolment as thousands of business start nearing their official auto enrolment staging dates.

Failing to Comply with Auto Enrolment is NOT an Option

An Employer's responsibility to automatically enrol eligible jobholders into a good pension plan, and to make contributions to it are laid out in the Pensions Act 2008, which sets out a number of obligations for employers.  Set out below is a summary of the main obligations for Employers:

Confirm Who To Contact

You should do this now. This step will take around 5 minutes. If you haven’t already done so, you should now confirm who the employer / owner / most senior person in the company is as they are responsible for making sure the legal duties are met. They will be sent letters to keep them up to date with the tasks they need to complete and by when.

Confirm who to contact by going to: www.tpr.gov.uk/elect

Choose A Pension Scheme

You should do this at least 6 months before your staging date. You’ll need to have a pension scheme that is set up for automatic enrolment. You and your staff will pay money into this scheme to help them save for their retirement. If you have an existing scheme you should check with your provider to see if it can be used for automatic enrolment. If it can’t, or you don’t have an existing pension scheme, you’ll need to find a new one.

Work Out Who To Put Into The Pension Scheme

You must do this on your staging date. On your staging date, you must therefore work out how much each member of staff earns and how old they are. 

Write To Your Staff

You must do this within 6 weeks after your staging date. It is your legal duty to write to all your staff individually to explain how automatic enrolment applies to them.

Declare Your Compliance

You must do this within 5 months after your staging date. You can start your declaration of compliance at any time but you must complete it by your declaration deadline. Your declaration is an online form for you to tell us how you have met your legal duties. Even if someone else has helped you with your duties and may even be completing the declaration for you, it is your legal duty to make sure that the declaration is completed on time and the information entered is correct. If not you may be subject to fines.

 *The fine for not Declaring Your Compliance is £400.00*

Ongoing Duties:

Once you have completed your declaration of compliance you still have ongoing duties towards your staff. These include:

  • paying money into their pension scheme
  • dealing with requests to join and leave the pension scheme
  • monitoring the ages and earnings of your staff
  • keeping accurate records of what you have done.

Risks of Non-Compliance

The Pensions Regulator: Escalating Penalty Notices issued under Section 41 of the Pensions Act (Fines: £50 - £10,000 per day)

It is important that employers understand the risks to them with whatever Qualifying Workplace Pension and/or Auto Enrolment solution they choose.

If the employer is found non-compliant there is a risk they could be fined. The fines are related to the number of staff in the company and will be levied where employers:

  • Fail to register with The Pensions Regulator (TPR)
  • Offer their employees incentives to opt-out of joining the pension scheme
  • Fail to meet their monthly contribution requirements                                                               

The following table shows the prescribed “DAILY” fine that can be imposed for the period that an employer remains non-compliant:

NUMBER OF STAFF IN

THE COMPANY

PRESCRIBED DAILY RATE

FOR COMPANY FINE

1-4

£50

5-49

£500

50-249

£2,500

250-499

£5,000

500

£10,000

The following table shows the number of investigations carried out and the number of times that The Pension Regulator has used it’s statutory powers to enforce the Auto Enrolment legislation:

THE PENSION REGULATOR REPORT (date)

INVESTIGATIONS

TPR STATUTORY

POWERS USED

To June 2014

917

23

To December 2014

1516

169

To March 2015

1962

446

To September 2015

3044

672

How can EmployEasily Legal Services Help You?

As specialists in all areas of employment law and HR, the team at EmployEasily Legal Services are well placed to assist employers with their legal obligations under auto enrolment.

Contact us today to find out how EmployEasily Legal Services can help you prevent problems and protect your business!




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