Auto Enrolment Pension Schemes: What an Employer Needs To Do
One of the issues that you have when running a business is that of pension auto-enrolment. Since October 2012, employers have been required to enrol employees into their pension scheme automatically unless they do not qualify.
In order to be enrolled, an employee must be over the age of 22 and under the state pension age. They must also be earning over £10,000 a year. Both you and the employee have to pay contributions to the pension scheme.
You may have other workers who are not eligible to join your pension scheme. A non-eligible employee is one who is earning above £10,000 per year and is aged between 16 and 21 or aged between state pension age and 74, or is earning between £6,240 and £10,000 per year and is aged 16 - 74.
There may also be a situation where you have an employee who is earning less than £6,240 a year and is aged between 16 and 74. This employee is an “entitled” worker and if they ask to join your pension scheme, you must enrol them into it, but in this instance, you do not have to pay any contributions.
Auto enrolment can get confusing
Auto enrolment pensions can get quite confusing because there are other things that can happen, but at Pay Check, as one of the foremost payroll outsourcing companies in the UK, we can deal with this for you as well as your payroll. You might, for instance, be a start-up and have an entitled worker, but you don’t have a pension scheme, but that entitled worker asks to join it. In this case, you have to set one up.
You can be in a situation where you have auto-enrolled an eligible worker, but that worker can ask to opt out, which they are entitled to do. Depending upon when they opt out, they may be entitled to a refund of their contributions to date. The same worker can choose to opt in again, and if they do you have to re-enrol them.
You can also have a situation where an employee opts out and does not choose to opt in again. However, if this should happen, after three years you have to auto enrol them into the pension scheme again. And they can choose to opt out again!
No issues. When you use us as one of the leading payroll outsourcing companies in the UK, we can handle all of this for you so that you don’t start getting fined by the Pensions Regulator for making mistakes.