Stay compliant

The Smart Pension platform helps you to ensure  your clients can stay compliant with UK auto enrolment law

Compliance

Our Adviser platform is for accountants, bookkeepers, payroll bureaus and payroll software providers, HR, and independent financial advisers.


We've designed it to help you manage a portfolio of clients, enabling them to set up a Smart Pension scheme that helps them meet their auto enrolment obligations. Simply sign them up and leave them to it, or manage their pension scheme for them.

How can Smart Pension help my clients stay compliant?

We're a fintech company. Everything we do brings pensions experts and technology experts together, specifically to make compliance easier for your clients.

As each employer onboards their employees and sets up Smart Pension, our software automatically works out what needs to happen next. Many things need to happen behind the scenes, such as sending out personalised letters about contributions. We take care of it all.

  • Paying the right level of contributions
  • Responding to requests for higher contributions within the right timeframe
  • Managing adjustments to PAYE reporting
  • Communicating clearly with employees as they approach retirement
  • Assessing employees' qualifying earnings on a regular basis

Employers’ obligations: unless the employee opts out, employees will have to automatically enrol these employees and contribute to their pension fund.

Will Smart Pension help me make a declaration of compliance?

Yes. When it comes to declaring compliance, the software will also generate authoritative reports. These show how many people were employed on the duties start date, how many were already in a pension scheme, and how many needed to be enrolled or re-enrolled at the time.

Without software like Smart Pension, the declaration of compliance may feel like a few minutes’ paperwork for many smaller employers. But in a larger organisation or with high headcount turnover, being confident about automated reporting makes a significant difference.

Smart Pension makes automatic enrolment easier

Every company with staff in the UK or ordinarily working in the UK must enrol those employees automatically in a pension scheme. It’s the employer's responsibility to let their employees know about auto enrolment and how it affects them.

Employers must manage that enrolment process, but Smart Pension offers everything needed to meet legal obligations in setting up and managing a pension scheme for employees.

In addition, we automatically provide all the compliant communications needed to meet auto enrolment obligations.

How can Smart Pension help my clients stay compliant?

The Pensions Regulator tries to provide as much practical advice as possible to help employers stay compliant. It has an excellent website. If you’d like to visit the Regulator’s website, this button opens the website in a new window, so you can refer back to our site at the same time.

Can The Pensions Regulator check up on my clients?

Yes. If the Regulator wants to, it can visit an office to inspect a pension scheme. It can also ask the employer to prove the right employees are being enrolled automatically.

This is why it's important to have a  pension scheme that delivers compliance automatically.

The Pensions Regulator has a variety of powers to investigate, including the power to issue formal notices requesting information, inspection powers, or to issue statutory notices where an employer has failed to meet its duties.

If The Pensions Regulator isn’t satisfied with the way a company is running a scheme, then it may issue a Compliance Notice, an Improvement Notice, or an Unpaid Contributions Notice. These notices outline a problem that must be addressed.

The Pensions Regulator may also estimate any unpaid contributions, charge interest on them, and recover unpaid contributions on behalf of scheme managers and trustees. And if the Regulator believes a company hasn't complied with its obligations, it can issue a penalty notice and a fine. These notices include:

  • a Fixed Penalty Notice with a fixed fine of £400;
  • an Escalating Penalty Notice that charges £50 to £10,000 for every day you are non-compliant depending on how many employees there are have in the PAYE scheme
  • a Prohibited Recruitment Conduct Penalty Notice with a maximum fine of £5,000
  • a Civil Penalty Notice for non-payment of contributions, of up to £5,000 per individual and £50,000 per organisation
  • Unpaid Contributions Notice - this requires you to pay unpaid contributions plus interest and may make the employer liable to pay the employees' contributions which are overdue.

If a company fails to pay a penalty, the Regulator can take legal action to recover it. If the company remains non-compliant, the Directors may face prosecution and prison term of up to two years - so it’s easy to see the value of choosing the right workplace pension provider.

How do companies avoid penalties?

To avoid receiving penalties or enforcement action from The Pensions Regulator, a company must set up and run a compliant workplace pension scheme.

  • Providing employees with information about the company's rights
  • Automatically enrolling all eligible employees into a suitable pension scheme and making contributions
  • Putting any non-eligible employees who decide to opt in, into the pension scheme and making contributions
  • Writing to employees, letting them know their choices about opting out
  • Making sure eligible employees who want to opt out are removed and, where it’s appropriate, refunding their contributions
  • Submitting a Declaration of Compliance to the Regulator
  • If postponing automatic enrolment, providing employees with information of when they will be enrolled and their rights.
  • Automatically re-enrolling eligible employees every three years
  • Keeping records of the enrolment process up to date, 365 days a year

Can Smart Pension help a company to avoid a penalty?

With Smart Pension, employers have the support of pension and technology experts. Our software does all the hard work – managing the account behind the scenes, communicating with employees, helping each employer to stay compliant.

  • Automatically assessing the workforce to understand who should be enrolled in the scheme
  • Enabling the upload of details via a payroll provider or via a spreadsheet or other format
  • Creating letters with the company's branding for issue to employees
  • Giving employees the chance to manage their opt in or out status themselves
  • Automatically calculating the contributions needed to reflect employees’ own savings

Who qualifies for enrolment?

Qualifying employees fall into one of three categories. They may be eligible jobholders, non-eligible jobholders, or entitled workers. Employees' classifications may change over time and, depending on how they're classified, you'll have different ongoing auto enrolment duties.

This is where the Smart Pension platform will help - saving time, money (and stress levels) by doing the assessments for you, automatically, using your payroll data.

Eligible jobholders are employees who are:

  • between 22 years and state pension age
  • usually working in the UK under their contract of employment
  • being paid over £10,000 per annum (current tax year 2019-2020)

Employers’ obligations: unless the employee opts out, they will have to automatically enrol these employees and contribute to their pension fund.

Non-eligible jobholders are employees who are:

  • working in the UK
  • between 16 and 74
  • earning less than the amount needed to be eligible for auto enrolment but more than the lower earnings threshold (more than £6,136 annually, £512 monthly or £118 weekly but no more than £10,000 annually in the 2019-2020 tax year).

OR

  • working in the UK
  • between 16 and 21 OR between the state pension age and 74
  • earning the minimum amount eligible for auto enrolment

Employers’ obligations: they won't have to automatically enrol these employees, but those employees can opt in. If they opt in, then employers have to make contributions to their pension fund.

Entitled workers are employees who are:

  • working in the UK
  • between 16 and 74
  • earning the qualifying lower earnings threshold or less ( £6,136 annually, £512 monthly, or £118 weekly for the 2019-2020 tax year)

Employers’ obligations: they won't have to automatically enrol these employees. Employees can opt in but, if they do, employers are under no obligation to contribute to their pension fund.

Understanding qualifying earnings

It's the employer’s responsibility to work out how much should be contributed to each employee’s pension by doing a calculation on qualifying earnings. Before that happens, the employer has to decide which basis to use - banded or unbanded earnings.

  • With banded earnings, there are upper and lower limits, known as thresholds, of £6,136 and £50,000 (these figures may change in each new tax year).
  • With unbanded earnings, the employer will be working out contributions as a percentage of the employees' total qualifying earnings (the total amount they take home, assuming an employee is not an entitled worker).

If an employer chooses banded earnings, then qualifying earnings (the amount used to work out the contribution) in the tax year 2019-2020 are the take-home pay between £6,136 and £50,000. This includes:

  • Salary
  • Wages
  • Commission
  • Bonuses
  • Overtime
  • Statutory sick pay
  • Statutory maternity pay
  • Ordinary or additional statutory paternity pay
  • Statutory adoption pay
  • Large town allowance
  • Some P11D benefits (although expenses like food, travel or car allowance are excluded)

Who is exempt from auto enrolment?

In some cases, employers may not have to enrol anyone. A business might be exempt from auto enrolment duties completely. A company can be exempt from auto enrolment if it only has Directors and no other employees. As an overview, there’s no need to set up an auto enrolment scheme if:

  • A company has a sole Director with no other staff working for the company.
  • The only people working for a company are Directors and none of them have an employment contract.
  • The only people working for a company are Directors and only one of them has an employment contract.
  • A company doesn't employ any staff because it has ceased trading, has gone into liquidation or been dissolved at Companies House.

Talking to employees about auto enrolment

There's more to pensions than contributions. Compliant communications in plain English are a cornerstone of our platform. It's important to stay on top of these letters and notifications, because employees need regular updates about their savings and what their options are.

Many of the communications that need to go out happen as the result of a change to an employee’s contributions. If they ask to boost their savings, for example, or change their mind about who should receive their funds when they die. The Smart Pension platform handles it all, and provides a clear audit trail that you and your clients can refer to.

  • Letting new staff know if they meet the criteria for auto enrolment
  • Informing new employees about auto enrolment and how it affects them
  • Providing details about choices as your employees approach retirement
  • Updating employees about any changes in tax benefits or regulation
  • Staying in touch with reports on pension savings and performance

By choosing a pension scheme provider like Smart Pension, the administrative task of composing and distributing communications to all staff is done automatically for you.

Who does the employer have to re-enrol – and when?

Once every three years, employers must re-enrol any staff who were employer when the pension scheme was set up but - for whatever reason - aren't in it, three years later.
There are four steps to this process.

1. Choosing a convenient re-enrolment date

The employer can decide when this happens (although they can't postpone re-enrolment). Most companies choose the beginning of a month or a date that aligns with their regular payroll cycle.

The day itself must occur within a six-month window that starts three months before the third anniversary of when automatic enrolment duties started and ends three months after it.

For example, if a pension scheme opened on 1st July 2019, then the third anniversary of that staging date would be 1st July 2022. The three-month window would run from 1st April 2022 to 30th September 2022, during which time all qualifying employees would need to re-enrol.

2. Assessing employees

Employers must work out who should be re-enrolled but only need to assess staff who have:

  • opted-out of the pension scheme
  • left the pension scheme after the end of the 'opt-out' period
  • stayed in the pension scheme but decided to reduce contributions below the minimum level, and meet the age and earnings criteria to be re-enrolled

Employers don't need to re-assess or re-enrol any staff member who, on the chosen re-enrolment date:

  • is already in the pension scheme used for auto enrolment
  • is under 21 years of age
  • is at State Pension Age (SPA) or over
  • has not yet met the age and earnings criteria for auto enrolment (less than 22 years of age and/or is earning less than £10,000 a year (£833 a month or £192 per week))
  • has opted out of the pension scheme within the last 12 months

Any employees who have resigned and are working their notice won’t need to be re-enrolled unless they or the employer retracts the notice, in which case the employees will need to be assessed for re-enrolment purposes.

Employers can decide if they'd like to automatically re-enrol any eligible jobholder who:

  • opted out or ceased active membership of a qualifying scheme (or a scheme that would, at the time, have been a qualifying scheme) at their own request less within the 12 months before the automatic re-re-enrolment date
  • was paid a winding-up lump sum within the 12 months before the automatic re-enrolment date while in your employment and then, during the 12 month period that started on the date the winding-up lump sum payment was made:
  • ceased employment and
  • was subsequently re-employed by the company
  • gave notice to end their employment (resignation or retirement) or was given notice of dismissal
  • has primary, enhanced, fixed or individual charges on their pension savings
  • holds the office of Director within the company
  • is a partner in a Limited Liability Partnership that is their employer, and is not treated for Income Tax purposes as falling within HMRC's 'salaried member' rules

If there are staff meeting those criteria, then they must be re-enrolled. If a pension scheme has been running for some time, it’s worth noting that some employees might not have met those criteria at the last re-enrolment date, but do so now.

If none of the employees need to be re-enrolled, then there is nothing to do except complete a re-declaration of compliance.

If there are employees who need to be re-enrolled, then they must be put back into a qualifying auto enrolment scheme and start paying into it.

3. Tell employees about re-enrolment

It’s a legal requirement to let employees know if they’re going to be re-enrolled – and what their rights are if they want to opt out – within six weeks of the re-enrolment date.

There's no need to contact employees who aren't being re-enrolled.

Any communications can come directly from the employer or the payroll provider, or – if Smart Pension is in place – we can do it automatically.

4. Completing a new declaration of compliance

The Pensions Regulator asks for a new declaration of compliance that confirms compliance with the pension regulations.

This needs to happen within five months of the third anniversary of the date automatic enrolment duties started, and within five months of each subsequent re-enrolment date. However, declarations can also be made as soon as employees are re-enrolled (or as soon as it becomes apparent there are none to re-enrol).

Usually, a re-declaration confirms how many employees are in the scheme, along with how many are being re-enrolled, and how many are exempt or otherwise not being re-enrolled. If a third party completes and/or submits a re-declaration of compliance for the employer, it’s still the employer's legal responsibility to make everything happen as it should do before the deadline.

Staging dates vs Duties Start Date

If a company is setting up a business now, then auto enrolment duties simply begin on the first day the employees start work. This is known as your Duties Start Date.

Auto enrolment staging dates were set by The Pensions Regulator, using PAYE scheme sizes as a way of defining who needed to be enrolled and when.

What are your clients’ pension duties?

The easiest way to understand new duties is to use The Pension Regulator’s tool. On the Duties Start Date (the first day as an employer), the employer must assess all of its employees. To use the tool, we can open it in a new window for you. This will let you come back to this page easily, to learn more about choosing a pension provider.

Choosing a pension provider

As The Pensions Regulator explains, if a company needs to set up a pension scheme to handle auto enrolment then it has to choose a pension provider.

For new employers, small companies in particular, this can be daunting – but Smart Pension makes it easy to set up and run a scheme, even if the company is only employing three or four people.

What happens if a company misses its Duties Start Date?

If a company misses its Duties Start Date, then it may need to backdate contributions for employees that should have been auto enrolled already.

If less than six weeks have passed

Depending on which pension provider is chosen, it can take a few weeks to set up a scheme. By comparison, we believe Smart Pension is quick and easy to get set up – often in just a few hours.

As soon as your client has chosen a pension provider, the team needs to enrol the employees who meet the auto enrolment criteria. If less than six weeks have passed since the Duties Start Date, then the employer will have to backdate those employees’ scheme membership to the day they first met the age and earnings criteria. The employer may also need to backdate contributions.

The alternative is to use ‘postponement’, which enables assessment to be postponed for up to three months. When an employer chooses postponement, it doesn’t need to backdate contributions. The employer can then postpone auto enrolment (the process, not its responsibilities) from:

  • An employee’s first day of employment
  • The day on which the Duties Start Date became effective
  • The date an employee first becomes eligible for auto enrolment

An employer can only choose postponement if the company is within six weeks of the date it became eligible to auto enrol employees.

If more than six weeks have passed

If more than six weeks have passed since the Duties Start Date, then the employer will have to pay any contributions that should have been made back to the date employees met the age and earnings criteria for the scheme.

As you can see, it's important to choose a pension provider that can help clients to get set up quickly.