Automatic Enrolment began in 2012 and since then it has been introduced in stages having started with the largest employers. Since February 2018, every employer, irrespective of the size of their business in the UK has had to provide a pension for their employees. In the latest article from Caroline Streatfield Bookkeeping based in Eastbourne, we look at staff who are eligible for automatic enrolment, what employers need to do, and NEST, which is the workplace pension established by the government for the scheme.
Automatic Enrolment Criteria
Eligible staff will be automatically enrolled into the workplace pension scheme although employees who do not want to join can opt out for a period of 3 years.
- Normally work in the UK
- Earn more than £10,000 per year
- Not already in a suitable workplace pension scheme
- Are at least 22 years old but under the State Pension age
You can look at the term ‘automatic’ like this, as it is automatic for your staff but not for employers. If you have at least 1 member of staff, you have automatic enrolment duties.
Employer Pension Obligations
If you have employees, you are obligated to do the following:
- Set up a workplace pension scheme
- Automatically enrol staff who meet the earnings and age criteria
- Pay contributions
- Enrol workers if they ask to join
- Make a minimum level of contributions
It’s important that your employees know how the government reforms affect them, and whether they have been automatically enrolled, details of the scheme that you have selected and that they do have the right to opt in.
Minimum Level Of Contributions
It’s currently set at 8% of an employee’s earnings made up of 5% from the employee, including tax relief and 3% from the employer. These figures are reviewed every year by the government and they apply to anything that employees earn over £6,136 up to a maximum limit of £50,000, which applies to the tax year 2018-19. As an employer, you will have to let your employees know how much of their earnings they will need to contribute.
NEST For Auto Enrolment
National Employment Savings Trust (NEST) has been set up by the government to make the process of auto enrolment easier for employers with employees paying a percentage of their salary into the NEST pension scheme. It’s worth noting that there are no charges for transferring pension pots into or out of NEST and family members and friends can also contribute to the NEST fund.
Conclusion
Once you are registered as an employer you will need to provide a pension to certain employees as outlined, with minimum percentages of contributions with NEST recommended as a provider.
What To Do Next
The experienced and expert staff at Caroline Streatfield Bookkeeping can help you as an employer set up pensions for your employees and guide you through automatic enrolment. As an employer you have to make a declaration to the Pensions Regulator, so we are here to make sure that you comply with your duties and avoid any nasty penalties. We can also provide on going payroll and bookkeeping services. For more information and a without obligation chat, please call Caroline on 07982 682746 or email info@bookkeepereastbourne.co.uk