Ashton Hoyle IFA - Automatic Enrolment

Dec 3, 2013
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Automatic Enrolment is a new Government scheme enforcing every employer to begin a pension scheme for their employees and automatically enrol certain individual’s dependant on their age and qualifying earnings, making minimum contributions set by The Pensions Regulator.
Businesses that employ 59-499 staff will have a ‘staging date’ in 2014, (the date their obligations begin); these employers should have all ready started their preparations.

Due to the complex legislation it is advised that preparations for automatic enrolment begin eighteen months prior to an employers’ staging date.

The remaining employees that are not automatically enrolled will also be given the opportunity to join the scheme, some of which will also receive contributions if they decide to ‘opt in’, others will be given the chance to join without the employers contributions.

Minimum contribution levels are being ‘phased in’, increasing each year until they reach their maximum in 2018 – 3% employer, 5% employee.
There are four different methods of contributing to employees, dependant on the definition of pensionable pay that the employer chooses to use. Different methods of contributing can be applied to different members of staff dependant on their pay structure. In order to apply these different methods an employer must ‘self-certify’ themselves, completing the required form and send it off to The Pensions Regulator.

Pension providers are all ready turning away business that is deemed not profitable enough, or too much of an administrative burden for them. Providers are in a comfortable position to do this as an avalanche of demand is approaching. Large businesses have all ready fulfilled their duties which began in October 2012. The Pensions Regulator has all ready issued fines despite these businesses having huge HR departments. Failure to fulfil the requirements will leave an employer exposed to daily fines ranging from £50 - £10,000 for non-compliance, on top of an on-spot fine.

Some pension providers offer ‘middleware,’ a software that can help the employer cope with; contributions, reports, opt-ins and opt outs, postponement and on going monthly assessment of the workforce. This is achieved by integration with payroll systems.


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