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27-01-2014

To date around 8,000 of the UK’s largest employers have had to comply with the new automatic enrolment requirements, which require them to automatically enrol all of their eligible workers into a qualifying pension scheme and pay contributions on their behalf. Over the next 3 years the remaining 1.5 million employers with workers in the UK will also have to comply.

Preparing for automatic enrolment is a significant challenge. That is why we have launched a new auto-enrolment compliance tool, aeready, to help you comply with your legal obligations. The tool, which is available here, is designed to you to:

  • understand your organisation’s legal obligations
  • identify and prioritise the issues that you need to address in order to be compliant, and
  • avoid regulatory action for non-compliance, by providing you with an audit trail of the steps you have taken to comply.

What is automatic enrolment?

Automatic enrolment is a new legal requirement that will apply to all employers with workers in the UK. The automatic enrolment legislation requires your organisation to:

  • automatically enrol eligible workers into a qualifying pension scheme (unless they are already an active member of such a scheme)
  • pay minimum employer contributions or provide a minimum level of benefits
  • provide information to your workers about their new pension rights
  • re-enrol eligible workers who opt-out approximately every three years, and
  • register with the Pensions Regulator and keep records to demonstrate compliance.

Various protections have been given to workers to safeguard their automatic enrolment rights.

When will the automatic enrolment requirements apply to your organisation?

Your organisation will be required to comply with these new legal requirements from its 'staging date' (this is the term used to describe the date from which automatic enrolment will first apply to an employer). Your organisation’s staging date is determined by the number of people that were in its largest PAYE payroll scheme on 1 April 2012:

  • if your organisation had between 250 and 9,999 people in its largest PAYE payroll scheme on 1 April 2012 it will have a staging date between 1 April 2013 and 1 February 2014;
  • if your organisation had between 30 and 249 people in its largest PAYE payroll scheme on 1 April 2012 it will have a staging date between 1 April 2014 and 1 October 2015; and
  • if your organisation had less than 30 people in its largest PAYE payroll scheme on 1 April 2012, it will have a staging date between 1 January 2016 and 1 April 2017.

The Pensions Regulator has said that it will write to all employers around 12 months before their staging date to confirm the relevant date. If you have not yet received this letter you can confirm your organisation’s staging date by calling the Pension Regulator's automatic enrolment helpline on 0845 600 1011.

Preparing for automatic enrolment

As well as confirming your organisation’s staging date, there are a number of other steps that you will need to take to prepare for the introduction of automatic enrolment. This includes:

1. Putting together a project management team and a project plan

To ensure success, you should put together a team made up of representatives from your HR, pensions, payroll and finance teams, to project manage the implementation of your automatic enrolment strategy. You should also put in place a project plan to identify the actions that need to be taken, by whom and by when. Ideally, you should allow around 12 months to prepare.

2. Identifying the workers that will be covered

You need to determine who are your organisation’s ‘workers’ for automatic enrolment purposes. You can then assess which automatic enrolment eligibility category each of your existing workers is likely to fall into, in order to calculate the likely cost of compliance for your organisation as well as the potential impact on your organisation’s future HR strategy and pay awards.

3. Making strategic decisions as early as possible

You will need to make several key decisions in order to determine your organisation’s automatic enrolment strategy, including:

  • which scheme(s) to use;
  • what the contribution rates will be;
  • whether to make changes to your existing pension arrangements or your wider benefits package; and
  • whether to operate a postponement period for some or all of your staff.

These decisions should be taken and signed off at the earliest opportunity.

4. Identifying a payroll software solution

Identifying and implementing a payroll solution to assess workers’ eligibility for automatic enrolment purposes is one of the most critical elements of any auto-enrolment project. Therefore, we recommend that you speak to your payroll provider about this and investigate other software solutions as soon as possible. You should also allow plenty of time to test your chosen solution before your staging date.

5. Preparing your communication strategy

Communication is key to the success of automatic enrolment. The last thing you want is for your workers to be surprised when the first pension contribution is deducted from their pay. Therefore, you will need to develop an effective communication strategy to ensure that your staff know what is happening, when and how they stand to benefit. Starting early and drip feeding key messages are two top tips for success.

Find out more

Find out more about automatic enrolment or speak to your usual Eversheds’ adviser.

Eversheds' Automatic Enrolment Compliance Tool

Training session: Auto-enrolment and HR - compliance, communication and implementation

Click here for further details on the auto-enrolment and HR training session.

For more information contact

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