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From October 2012, legislation states that all employers in the UK must automatically enrol employees into a qualifying workplace pension scheme. This legislation sets out the minimum standards for pension schemes which employers use for auto enrolment for the next 5 years and beyond.
The largest employers in the UK were required to comply from October 2012, with the implementation for all current employers concluded by April 2017.
The full list of staging dates can be viewed on the Pensions Regulator’s (tPR) website
You may have already commenced your search for a suitable qualifying workplace pension scheme or could be using an existing scheme which may or may not need some alterations to be compliant. It is important that you understand your responsibilities to ensure you do not breach legislation.
The majority of the legislation is aimed at employers but many of these tasks can be delegated to a third party, whether it be auto enrolment data management, communications or selecting the pension scheme where your employees will be automatically enrolled into.
Glossary of bold terms
- Staging date – The date you must commence assessment and contribution
- Postponement - A period of up to 3 months deferment of payment of contributions
- Opt out – An employee’s right to leave the arrangement within 1 month of enrolment
- Opt in - A Non Eligible Jobholder’s right to join the scheme
- Entitled Worker - An employee earning under the lower threshold
- Non Eligible Jobholder - An employee earning over the lower threshold but not automatically being enrolled
- Eligible Jobholder - An employee being auto enrolled
When reading this summary, it must be noted that this is only an overview of an employer’s responsibilities and further information is available at the Pensions Regulator’s website.
What employers need to do and where BlueSky can help
1. Register a point of contact
This would normally be someone within the HR Department or Payroll area of your company - The Pensions Regulator.
2. Know your staging date, review pension arrangements and communicate the process
Once you are aware of your staging date, existing arrangements should be assessed to ensure they are auto enrolment compliant; this will cover eligibility, contribution rates and salary definitions.
You may also wish to use this opportunity to ensure that your employees are able to access BlueSky, a proven scheme with a solid governance structure that has served many employers for over 25 years.
You should then start the communication process with a simple poster announcement throughout the workplace, preferably, 6 months before your staging date which BlueSky can provide.
3. Assess the workforce and register your chosen scheme
You must register with tPR to confirm you are complying with legislation within 5 months of your staging date and provide the following information:
- Employer details
- Pension scheme used
- If postponement is being used
- Number of workers, eligible jobholders and workers in any existing arrangement on your staging date
A summary entitled ‘Main steps to automatic enrolment’ is available at tPR website
The BlueSky Auto Enrolment and Data Communication package manages the following processes.
You will then need to keep data for everything mentioned above and records of members who have opted out of the chosen arrangement. This information must be kept for at least 6 years and be made available to tPR if requested. You should also remember, this is not a one off exercise and your responsibilities are ongoing.
Categorisation of Workers (who ordinarily work in UK only)
Pay reference periods
In most cases, you will need to assess your workforce in line with your pay periods.
4. Communicate with employees
On staging, workers already in a scheme must be provided with information about the scheme and that it satisfies the requirements of auto enrolment.
The BlueSkyAuto Enrolment and Data Communication package manages all communications.
For Eligible Jobholders being automatically enrolled, they must be provided with:
- Information about their enrolment
- What it means for them, including contribution rates
- Right to opt out
Workers subject to postponement need to be told about the deferral period and their rights to opt in.
Non Eligible Jobholders and Entitled Workers must be provided with information on how to opt in or to join a pension scheme.
The contribution rates payable, as a percentage of qualifying earnings, from an employers’ staging date will increase in line with the following (assuming all element of pay are included – Total Pay).
Qualifying earnings between £5,772 and £41,865 (for 2014/2015) include:-
- Statutory Sick Pay
- Statutory Maternity Pay
- Statutory Adoption Pay
- And any other pay element which could be considered as any of the above
BlueSkycan offer a solution around all of your auto enrolment issues including:
- BlueSky Pension Scheme (a qualifying workplace pension scheme)
- BlueSky Auto Enrolment Data and Communications Package. For all the data assessment and notification requirements including communications to members and workplace posters
0333 321 8208