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Auto Enrollment

Auto Enrollment Edinburgh

Allsquare will help your company establish and manage your Auto Enrollment system which will give your employees a workplace pension

By February 2018, all UK employers are required to offer automatic (auto) enrollment into a workplace pension scheme to their qualifying employees.

What is auto enrollment?

Automatic Enrollment is a government initiative designed to ensure that workers don’t miss out on the benefits of having a pension and that more people save for later in life. It is a compulsory scheme, and employers must not only enrol their eligible employees but also make contributions on their behalf.

Which employees are eligible?

Employees fit into one of three groups when it comes to eligibility for Auto Enrollment – eligible, non-eligible and entitled.

Employees who are between age 22 and the qualifying state pension age, and who work in the UK, earning at least £10,000 a year, but are not currently in a qualifying pension scheme at work, are considered eligible for auto enrollment.

Non-eligible staff between the ages of 16 and 22, or between the qualifying state pension age and 74 years old, can ask to be enrolled if they earn more than £10,000 a year. Those aged between 16 and 74 years old who earn at least £5824 but less than £10,000 can also request enrollment.

Employees aged 16 to 75 years old who earn less than £5824, are considered entitled employees, and can also ask to join, though you do not have to make contributions for this group.

How much do employers need to contribute?

The government has set minimum levels for both the contributions that employees and employers must make to the workplace pension scheme. The government also makes a contribution by offering tax relief on pension contributions. Currently, employers are required to pay the equivalent of 1% of an employee’s qualifying earnings, which is employee income before income tax and national insurance deductions. This amount is expected to rise to 2% by 6 April 2018 and then to 3% by 6 April 2019.

What happens if an employee chooses to opt out?

Employees have a month from being auto-enrolled into the workplace pension scheme to opt out and be refunded on any contributions they have made. The pensions scheme will also refund any contributions that you as the employer have paid in. After the one month opt-out period, employees can still choose to stop contributing but if they do, all contributions will remain invested in the scheme. It is illegal to coerce employees to opt out and employers can be fined by the pensions regulator if they do so.

Choosing the right pension scheme

When choosing the right pension scheme for your organisation, how easy it is to administer and communicate to staff, as well as the scheme’s investment strategy, are all things you will want to consider. Allsquare can help you explore which schemes are right for you and can offer you simple accounting solutions that put you and your organisation in control of your pension scheme. For more information, why not get in touch with Allsquare today 0131 343 1510?