Publicity Overload Blog...
2nd November 2015
Kim Mulligan, Head of Finance
Pension Auto Enrolment - How to Prepare

Why do we need Pension Reform? It seems that people are not only living longer, healthier lives, they are also under saving. The worker to pensioner ratio has also drastically reduced; in 1901 there were 10 workers putting money into the pot for each pensioner; by 2010 this was only 3 workers per pensioner; and by 2050 it is estimated that the figure will be 2 to 1.

Auto Enrolment is a very significant change to pension reform, it is a legal requirement for employers to automatically enrol workers into a workplace pension scheme (and contribute to it on their behalf if they are eligible workers).

Most small to medium businesses will be facing the prospect of trying to understand and implement their Auto Enrolment preparations over the next 2 years. It may help to break it down into some smaller more manageable steps and then focus on each one separately before bringing it all together in time for your Staging Date.

The first and most important step is to know your Staging Date - this will lead decisions as to when you will need to take certain actions. Businesses with 30-49 Employees will have already done this. Businesses with less than 30 Employees will stage between Jan 2016 and April 2017. All new employers from Oct 2017 will have an immediate duty to enrol employees. The way to find out your staging date is to go here: and enter your information into the required fields.

The next step would be to nominate a contact. This can be done here: The primary contact must be the most senior person in the company, Managing Director, CEO etc. The secondary contact will be the person responsible for actually implementing the enrolment, Bookkeeper, Payroll Administrator etc.

You will then need to assess your workforce to see who will be eligible for enrolment. Many Payroll companies have been working on providing software that can do this for you; it looks at the criteria of age and earnings and calculates who needs to be automatically enrolled. Non eligible workers can request to be opted into the scheme and if they do so you must also contribute on their behalf. An example of a non eligible worker is someone aged 16-74 whose earnings are higher than the lower earnings threshold, but lower than the trigger for Auto Enrolment. An Entitled worker is someone aged 16-74 who earns less than the lower earnings level. There is no duty to enrol them or contribute on their behalf but they can request to be opted in.

It will then be time to start reviewing your pension arrangements. You may need a Financial Advisor for this. The Pension Regulator website has plenty of advice about how to select a good quality scheme that meets all the AE rules. Many pension providers will not accept smaller businesses as it’s not profitable for them. There are a few that will provide a scheme for even the smallest of companies; NEST, Now Pensions and The People's Pension being the most well known of these.

With all this in place and with the help of your payroll software you will be ready to Auto Enrol on your staging date. The first pension deduction must take place in the first payroll in the month of your staging date. It is only after that has happened that employees can choose to opt out. They must do so within 30 days if they wish to have their contributions refunded. It is the responsibility of the employee to contact the Pension provider and inform them of their wish to opt out. The scheme holder will then send a stop notice to the Employer.

The last step is to complete a Declaration of Compliance, this must be completed even if there is no one to automatically enrol, and must be completed within the deadline of five calendar months after your staging date.

Auto Enrolment is an ongoing process, staff must be assessed every pay day as bonuses or overtime can affect their eligibility. Staff who have opted out must be automatically enrolled again every three years, and would then have to opt again if they so wish to.

There is help out there for those who need it, via the Pension Regulator website and the website. It's advisable to start your preparations immediately if you haven’t already done so and if possible, invest in some good software that will do most of the assessing and complying for you.