What do you need to contribute?
The minimum contributions rate must be at least 8% of the workers’ ‘qualifying earnings’ by 2019, with employers picking up at least 3% of that amount. You can phase in the cost of your employer duties up until 2019, which is designed to help you manage the impact on your cashflow.
‘Qualifying earnings’ are a band of earnings from £5,824 to £42,385 (figures correct for the 2015/16 tax year). These earnings include salary, wage, over time, bonuses, commission, statutory sick pay, statutory maternity pay, ordinary or additional statutory paternity pay and statutory adoption pay.
As an alternative to using the qualifying earnings definition, you can choose to use ‘certification’. A certificate can cover all workers or groups of workers.
Our Auto Enrolment packages start from just £400 |
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Your responsibilities
Your responsibilities are different depending on the workers eligibility:
- Enrol them into an Auto Enrolment scheme
- Make contributions
- Set up and manage process for workers to opt-out
- Keep robust records
- Provide effective communication on your scheme and their rights to opt-in
- If requested, arrange scheme membership and make contributions
- Set up and manage process for workers to opt-out
- Continually assess individuals in this group – they may become eligible e.g. age and earnings
- Keep audible records
- Provide effective communication about your scheme and their rights to join the scheme.
- If requested, arrange scheme membership and make contributions (if applicable)
- Deduct contributions from their salary and pay into the scheme
- Continually assess individuals in this group – they may move into the Eligible of Non-eligible groups at a later date
- Keep robust records
What happens if you don’t meet your Auto Enrolment requirements?
The Pensions Regulator has the power to investigate firms who it believes are not meeting the requirements and issue penalties for non-compliance.
Large employers have already gone through the Auto Enrolment process and The Pensions Regulator indicated that it is investigating hundreds of them about their compliance with the legislation and may take enforcement action regarding non-compliance. The financial penalties for non-compliance are significant but it also serves to highlight the complexity of complying with the legislation.