Beyond the balance sheet

How to set up a qualifying pension scheme auto enrolment [Infographic]

Ercan Demiralay 11/4/2016 4 minute read

Ercan Demiralay FCCA explains the processes involved in preparing and implementing auto enrolment in your business.

The auto enrolment scheme means employers have a duty to enrol certain employees into a pension scheme and then make contributions towards it. Setting up and implementing your HR and payroll for this is a complex process that is likely to involve a lot of interaction and communication between you, your accountant, your independent financial advisor (IFA), your employees and the pension provider.

To make things as simple as possible for you, we've mapped out the qualifying pension scheme auto enrolment journey in an infographic highlighting the different processes and options along with who is involved at each stage. Review this carefully for your growing business.  

Be sure to check our glossary of terms below the image. Please note that the term client in the diagram refers to you as the business implementing auto enrolment as part of your HR and payroll systems. Click on the infographic for an enlargened PDF version. Need help with auto enrolment & managing growth?Infographic for the qualifying pension scheme auto enrolment

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Staging date

Your staging date is the date when your auto enrolment duties come into effect. You need to be prepared for this and if you haven't done so already, go to the Pension Regulator website and enter your PAYE reference to find out when your staging date is due to commence. You can also find this information through your payroll software package.

Postponement at staging

You have the choice to postpone auto enrolment for some or all of your staff. You'll need to write to them informing them you're doing this.

Assessment of your workforce

To understand which employees qualify you should read our post on, assessing your workers for auto enrolment - who qualifies? Once you understand who in your workforce this is relevant to, then you'll need to select a pension scheme and set this up for contributions through your payroll.

Communicating the pension scheme to your workers

You'll have to provide your employees with information about how auto enrolment applies to them. This can be done through either hard copy (such as a letter) or, electronic email or, both. However, you can't communicate this information via a website, intranet or posters in your workplace.

Within 6 weeks of your staging date you need to communicate with:

  • Staff being enrolled - to explain that contributions will be deducted from their wages and paid into a pension scheme as well as a contribution coming from you as their employer. You'll need to provide details of the pension scheme selected for staff how they can opt out of it if they choose to do so.   

  • Staff not being enrolled - informing them that they have a right to opt in or join a pension scheme which can be used for auto enrolment. You'll then need to explain how this could apply to them.

The declaration of compliance

Your must provide information demonstrating you're fulfilling your auto enrolment duties. This requires you to complete a declaration of compliance using The Pension Regulators online service within five months of your staging date.

Of note, you won't have been deemed to have completed your automatic enrolment duties until you've submitted your declaration. This means it's your legal duty to do this and failure to complete it within 5 months of your staging date will result in penalty fines being applied. You can also authorise your IFA or accountant to do this on your behalf. 

Pay reference period

This is the period over which the worker is paid their regular salary or wages. If you pay your staff monthly then the pay reference period is 1 month. Each pay reference period you'll need to repeat your auto enrolment responsibilities, namely:

  • Identify your staff who are "eligible jobholders"

  • Automatically enrol them into the workplace pension scheme

  • Communicate to staff and provide information specific to their circumstances

  • Maintain accurate records each pay reference period so the Pensions Regulator can see compliance with auto enrolment legislation

Independent Financial Advisors

We have worked with the following Independent Financial Adviser’s and they can be contacted for further information and advice:

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The content of this post is up to date and relevant as at 11/04/2016.

Please be aware that information provided by this blog is subject to regular legal and regulatory change. We recommend that you do not take any information held within our website or guides (eBooks) as a definitive guide to the law on the relevant matter being discussed. We suggest your course of action should be to seek legal or professional advice where necessary rather than relying on the content supplied by the author(s) of this blog.


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