Auto Enrolment Myths vs. Reality

By February 21, 2014Legal Update
Woman turning large cogs

The introduction of Auto Enrolment is causing confusion for employers, who may not know what they need to do or when they need to do it.

This Q&A is designed to clear up some common misunderstandings.

As with any change in legislation, myths develop, often based on misunderstandings. These are some of the common ones that the Pensions Regulator is coming across, together with their answers.

“I can guess my staging date by how many employees I have”

A. False.

Your staging date is based on the number of people in your PAYE scheme as at 1 April 2012, according to data supplied to The Pensions Regulator from HMRC.

The only way to accurately know your staging date is by looking at letters sent from the Pensions Regulator or by entering your company PAYE reference into their website.

“Postponement makes my staging date later”

A. False.

Your staging date remains the same regardless of whether you postpone. Postponement simply means you can postpone the date you need to automatically enrol your eligible staff for up to three months.

Your staging date is when the new workplace pension laws relating to automatic enrolment come into force for your business. The date by which your pension scheme needs to be ready. Even if you postpone, staff can ask to be put into your pension scheme during the postponement period.

“My staff are already in a pension scheme so I don’t have to do anything”

A. False.

If you already offer a pension scheme for your staff, you’ll need to make sure you can still use it.

Your pension provider will be able to help you decide.If it’s OK to continue using your pension scheme as it is, you will need to write to each of your staff to tell them about auto enrolment and about your scheme. You need to automatically enrol any new starters or staff turning 22 who earn £9,440 and above, so your scheme will need to allow for this.

If it doesn’t you might need to get a new scheme. The auto-enrolment “to do” list is a long one and takes time to work through. Because of this the Pension Regulator recommends that you start planning 12 to 18 months before your staging date.

Why not contact us today to see how we can work with you and potentially reduce your auto enrolment costs.

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