Automatic enrolment was introduced as a law by the Government from 2012 to help people to save more for retirement and encourage them to have a pension. This change affects every organisation with an employer PAYE scheme.
The law requires every employer to assess all employees and then automatically enrol any workers who are eligible into a qualifying workplace pension scheme. Both employees and employers will have to make minimum contributions to the scheme as set out by The Pensions Regulator.
The phase-in of auto enrolment began in October 2012 with all organisations required to be on board by February 2018. The phase-in is being managed by The Pensions Regulator, who provide organisations with an ‘auto enrolment staging date’ that tells them on what date they are required to have a qualifying scheme in place. The staging date will be determined according to the number of employees forming the business’s PAYE scheme at 1 April 2012.
Auto enrolment places significant responsibilities on employers, with penalties for those who fail to comply. It is advisable for businesses to find out as soon as possible when their staging date is and allow at least 18 months prior to this date to plan for implementation.
Inevitably, auto enrolment will have a big impact across several departments within an organisation. Organisations currently processing their own payroll may wish to consider outsourcing to a dedicated payroll team which would significantly reduce administration time at the organisation.