Your Employer Duties
Eligible jobholder – automatic enrolment
Within one month of an eligible jobholder’s automatic enrolment date (for example the day they start work), the employer must provide them with certain information. This must include details of when they will be automatically enrolled, their right to opt out and the terms and conditions or details of the scheme into which they will be automatically enrolled. Once an eligible jobholder is automatically enrolled, the employer must continue to deduct/make contributions as long as they remain in the scheme.
Non-eligible jobholder – right to opt in
Within one month, the employer must provide non-eligible jobholders with certain information. This must include a statement that they can require the employer to enrol them into an automatic enrolment scheme by completing an opt-in notice. Where a non-eligible employee opts in, the employer must deduct/make contributions as long as they remain in the scheme.
Entitled worker – right to join
Within one month, the employer must provide entitled workers with certain information. This must include a statement that they can require the employer to enrol them into a pension scheme by completing a joining notice. The pension scheme doesn’t have to be an automatic enrolment scheme and the employer is under no obligation to make contributions. However the employer must deduct the entitled worker’s contributions from their salary and pay these to the pension scheme on their behalf.
Employers must re-assess their workforce on the employer’s re-enrolment date. The re-enrolment date will generally be every three years from the employer’s staging date. The employer may adjust the re-enrolment date by up to three months before or after the three year anniversary of the staging date if required – for example to coincide with their payroll or accounting year end date.
Eligible and non-eligible jobholders may opt out by completing an opt-out form. They must get the opt-out form from the pension scheme or pension scheme provider. They have one month to opt out from the later of the date they received the enrolment information or the terms and conditions/scheme details.
Once completed, an opt-out form must be returned to the employer. Once the employer receives the opt-out form, they must:
check that the form is valid. If the opt-out form is not valid, the employer must inform the jobholder and ask them to resubmit the form
stop deducting contributions from the jobholder’s salary
refund any contributions that have already been taken from the jobholder’s salary.
Employers are under no obligation to continue making contributions if an eligible jobholder or non-eligible jobholder opts out.
Any worker (including entitled workers) in a pension scheme can decide to stop saving into the pension at any time. They will not need to complete an opt-out form outside the opt out period of one month. They will not receive a refund of any contributions they have made if the automatic enrolment scheme is a group or individual personal/stakeholder pension.
Automatic Enrolment Schemes Explained
Employers must register with TPR that they have an automatic enrolment scheme in place within four months of their staging date then re-register every three years. An automatic enrolment scheme must satisfy certain requirements including the ‘quality requirements’.
The quality requirement is primarily based on minimum contribution level. The minimum contribution levels will be phased in over five years from the start of the employer duties based on their staging date. Employers may pay the whole of the total minimum or just their part then require jobholders to make up the difference to the total minimum. Employers may use one of the options below or a combination of them to meet the minimum contribution level.
Minimum contributions will be based on an earnings band between £5,824 and £42,385, called qualifying earnings. The band earnings will change each year and these figures are for 2013/14.
Qualifying earnings includes salary, wages, overtime, bonuses, commissions, statutory sick pay, statutory maternity pay, ordinary/additional statutory paternity pay and statutory adoption pay.
Employers must check that their minimum contributions are made, any difference is deducted from employees, and the total is paid to the pension provider each time a contribution is due.