Firstly, why is this important? The government introduced legislation requiring all employers with staff in the UK, or ordinarily working in the UK, to assess and enrol eligible jobholders into an approved pension scheme. Generally this is known as automatic enrolment, or AE for short.
Employers have to manage auto enrolment from start to finish, enrolling workers that meet the Automatic Enrolment criteria and those that ask to opt-in. Smart Pension offers everything you need to meet your legal obligations in setting up and managing a workplace pension for your employees. I see many companies on a day to day basis get this right.
To summarise, there are three main areas of responsibility for employers to make sure their auto enrolment duties are met:
I could write a separate article on each of these but today, I will answer three common questions that I get asked.
This subject can cause a lot of confusion, especially if the worker is paid in arrears. For auto enrolment the dates submitted to the pension scheme need to be the relevant pay reference periods. The pay reference period is the period in which the employees’ wages/earnings are paid, not when they are earned (the earnings period).
For example: Samantha is paid a weekly salary and works 1 to 7 April but is paid in arrears on 10 April. Her earnings period is 1 to 7 April, but her pay period is 8 to 14 April.
It is the pay reference period dates (in this example that is 8 - 14 April) that should be submitted to the pension provider along with contribution data.
Another example, Tarquin is paid weekly every Friday for the hours he worked during that week, beginning on Monday 1 April and ending on Sunday 7 April and paid on Friday 5 April. The earnings period and pay period are both Monday 1 April – Sunday 7 April.
The Pensions Regulator (TPR) requires contribution submissions to be paid across to your pension provider by the 22nd of the month after you made deductions from your employees’ salaries. There are a few factors that you will need to take into consideration, such as
To put this into context; at Smart Pension we require data to be uploaded to the platform before midnight of the 5th of the month to be included into the automated Direct Debit payment. The Smart Pension platform will automatically collect outstanding payments (where we have data telling us how much to collect) on the 7th of the month. This makes sure that contributions are paid and invested before the deadline set byTPR, which is the 22nd of the month.
We also offer an additional Pay-Now function, where contributions can be uploaded and paid outside of the automatic Direct Debit payments. This means you can ensure contributions can be paid earlier if you want to. However, if you do this after the automatic cycle has run it is important that you allow at least 5 working days for the collection to complete to ensure that you meet the 22nd of the month deadline, to make sure contributions are paid in time.
An employer is reported to the Pension Regulator if contributions are more than 90 days overdue. Before this, the pension provider has a duty to alert the employer of the failed or missing contributions with the aim to resolve the overdue payments.
At Smart Pension we send the employer three notifications in advance of the 90 day reporting. The first notification comes one day after contributions are overdue, the second at 30 days overdue and the third at 60 days overdue. Within each notification members with outstanding contributions are clearly identified so that the employer understands what action needs to be taken.
If the employer needs additional assistance in bringing their account up to date, our team is on hand to provide guidance. Alternatively we also offer a managed service where employers can delegate the majority of the additional administration to correct the account to Smart Pension.
When an employer is reported to TPR, the Regulator will perform its own investigations. It is normal practice for TPR to contact the employer directly and request evidence that the reported period has been brought up to date. If TPR is not satisfied that the employer has met their requests a fine can be issued to the employer or for the most serious cases they may take out legal action
Find out more
Still have questions about managing a pension scheme, meeting employer duties or providing contractors a compliant workplace pension? Read more about how to stay compliant.
Contacting us is easy on FCSA@smartpension.co.uk or 0203 053 4430.
Launched in 2015, Smart Pension exceeds £4bn in assets under management (AUM) and now serves over one million members and more than 70,000 employers. It is powered by Keystone, Smart’s global savings and investments technology platform.
Aquiline Capital Partners, Barclays, Chrysalis Investments, DWS Group, Fidelity International Strategic Ventures, J.P. Morgan, Legal & General Investment Management, Link Group and Natixis Investment Managers are all investors in Smart Pension.