Auto-enrolment: do you know your duties?

As an employer, auto-enrolment rules require you to put qualifying members of staff into a workplace pension scheme.

Your responsibilities don't end there – auto-enrolment comes with ongoing requirements, including keeping records, monitoring staff details, and regularly re-enrolling staff into the scheme.

However, research by The Pensions Regulator suggests that employers' knowledge of these auto-enrolment responsibilities has decreased this year among micro- and medium-sized employers.

Among micro-employers, the percentage of people who said they were fully aware of their ongoing duties fell from 88% in summer 2018 down to 82% in winter 2019.

Meanwhile, for medium-sized employers, awareness dropped from 96% to 94%. Only small employers' knowledge of their duties increased over the same period, from 89% to 91%.

Here are the main ongoing duties to keep in mind.

Paying contributions

One of your main ongoing responsibilities as an employer is to continue making contributions to eligible employees' workplace pensions every time you run payroll.

Make sure you're paying in the right amount – currently, the minimum contribution is 3% of the employee's qualifying earnings, and the total combined payments made by you and the employee must be at least 8%.

For the 2019/20 tax year, the employee's qualifying earnings are those that fall between £6,136 and £50,000 a year.

For example, if they earn £20,000 a year, their qualifying earnings would work out as £13,864. It's this figure that you need to calculate the contribution percentage from, meaning a minimum pension contribution of 8% for the year would come to £1,109.12.

Keeping records

You need to keep records relating to all your auto-enrolment activities, including:

  • the names and addresses of those you've put into a pension scheme
  • when money was paid into the pension scheme
  • requests to join or leave
  • your pension scheme reference or registry number

You should keep most of these records for six years, apart from records of requests to leave the scheme, which you can keep for four years.

Monitoring ages and earnings of staff

Every time you pay staff, check their age and their earnings to see if you need to put them into a pension scheme.

If an employee is aged between 22 and state pension age, and earns over £10,000 per year, you'll need to enrol them in a pension scheme and write to them within six weeks from the day they meet those criteria.

Managing requests to join or leave the scheme

Staff who don't meet the auto-enrolment criteria may still be entitled to join the scheme if they choose. If they contact you asking to opt-in, you must put them into the scheme within a month of the request.

You will have to pay into the pension scheme if a worker is aged 16 to 74 and earns at least £512 a month or £118 per week.

On the other hand, if an employee asks to leave the scheme, you'll need to stop deductions from their pay and give them a full refund of what has been paid to date, within one month of their request.

Most pension providers will manage this on your behalf, so speak to your provider if you're not sure what to do.

Re-enrolling every three years

Every three years, you'll need to re-enrol staff who have left your pension scheme. This doesn't apply to those employees who left less than 12 months before the re-enrolment date.

Whether or not you have staff who have done this, you also need to complete a re-declaration of compliance and send it to The Pensions Regulator.

The way the staging dates for the introduction of auto-enrolment fell, many employers who were included in the scheme between 1 January 2016 and 1 April 2017 will now be in the process of re-enrolling and re-declaring their compliance.

You should have received a letter from The Pensions Regulator if you need to do this, but ask us if you're not sure.

Talk to us about outsourcing auto-enrolment.