Auto-enrolment and my clients

Talk to your clients and see whether they are aware of the obligations that auto-enrolment may place on them. If they are not familiar with their duties you can direct them towards this short leaflet from The Pensions Regulator (TPR).

www.thepensionsregulator.gov.uk/professionals.aspx

If your client already has a pension scheme then they will need to check that is compliant with the new regulations. You can use the following tool to determine whether a pre-existing scheme complies with the new regulations.

www.thepensionsregulator.gov.uk/employers/dc-qualifying-scheme-tool.aspx

Once your client understands their duties you can start doing what all ICB bookkeepers do and help your client run their business effectively.

Find Out Your Client's Staging Date

All employers in the UK have been allocated a ‘staging date’. This is the time from which the new duties will apply to your client.

Your client's staging date is based on the number of people in their largest PAYE scheme as at 1 April 2012.

For all clients with fewer than 30 employees, you can find their staging date by refering to the Staging Date table available on TPR's website.  You will need their PAYE reference:

www.thepensionsregulator.gov.uk/professionals/multiple-staging-dates-for-small-business-clients.aspx

For any clients with more than 30 employees, enter their PAYE reference number into the interactive tool on TPR's website:

www.thepensionsregulator.gov.uk/employers/tools/staging-date.aspx

Nominate Points of Contact

The Pensions Regulator will send regular emails at key stages in the planning process to help your client stay on track. Making sure that either you as the bookkeeper, or someone responsible within your client's firm, are the nominated point of contact will ensure the information that the regulator sends gets to the right person. Note that responsibility for complying with the duties remains with the employing organisation, not the nominated contact.

If your client's staging date is less than 12 months away, they should have received a letter from The Pensions Regulator about their automatic enrolment duties. They will need the code from this letter to nominate their contact online - it only takes five minutes to fill in the form. If they haven't had the letter, or have lost the code, they can email customersupport@autoenrol.tpr.gov.uk

Tip: If you know the letter code, you can complete this on your client's behalf via TPR's website:

https://forms.thepensionsregulator.gov.uk/workplacepensionsreform/nominate.aspx

The online form will ask for two contacts; Primary and Secondary where the Primary contact is the most senior person within the employing organisation, eg. CEO, and the Secondary contact is the person who will manage or implement enrolment, eg. you as the bookkeeper.

Nominating a contact does not mean that your client has completed their registration

Once you have found out your client's staging date you will need to start devising a plan to implement an auto-enrolment pension scheme. This process will involve liaising with both your client and external advisors in order to successfully manage the transition.  Please note you should not provide advice about pensions schemes themselves.

Assessing the Workforce

One of the first things that you or your client will need to do is assess the business's work force to find out who needs to be auto-enrolled. What you'll need to do depends on their ages and how much they earn. In the long term, check that any payroll software will alert you to any new or existing staff becoming eligible for automatic enrolment as they get older or their wages change.

What to assess

• Is the member of staff over 22 and under state pension age?
• Do they earn over £10,000 a year?

If the answer is yes, they will have to be automatically enrolled into a pension scheme that both the employer and the employee make contributions to.  These employees are known as 'eligible jobholders'.

Staff earning £10,000 or less

Staff aged 16 to 74, earning over £5,772 up to and including £10,000 a year, have the right to 'opt in' to their employer's automatic enrolment pension scheme. This is a similar process to automatic enrolment, and your client will have to contribute to their pension.

Those aged 16 to 74 who earn £5,772 a year or less have the right to join a pension scheme of some kind. They can only join after your staging date.

For more information go to opting in and joining.

Staff aged under 22 earning above £10,000

If your client has staff aged 16 to 21 who earn more than £10,000, they have a right to opt in to the automatic enrolment pension scheme. Again, you will have to contribute to their pension if they decide to opt in.

The table shows the rights of staff depending on how old they are and what they earn in a year.

For further information please consult the employer responsibilities section of the Pensions Regulator website

http://www.thepensionsregulator.gov.uk/employers/tools/employer-duties.aspx

When to assess

It's a good idea to assess the workforce of each of your clients straightaway, so they will be able to prepare for the costs involved in implementing a pension scheme. You’ll need to make sure staff data is correct, such as their full names, dates of birth, contact details and National Insurance numbers.

If your client does not have a pension scheme already, they’ll have to find one. Your services are limited in this respect because you are not qualified to offer pension scheme advice. You can direct your client to TPR's website here: setting up a pension scheme.

Bear in mind that your client, or you as their representative, will have to do a formal assessment on their staging date so you know exactly who you’ll have to automatically enrol. For more information go to On and after your staging date.

Reviewing the Software You Use

A crucial step in preparing for auto-enrolment is making sure that the payroll software your client uses is capable of implementing the scheme and working out who needs to be automatically enrolled.

Questions to ask software providers

When speaking to your existing software provider or selecting new software, you should ask whether the system:

• assesses the workforce
• allows the use of postponement
• calculates pension contributions
• handles opt-in and joining
• handles opt outs and refunds
• supports you in generating and issuing letters to your client's staff
• keeps records and provides reports
• works with some or all pension scheme provider systems

Information to put into the software

Having got the right software in place, you’ll need to know how to use it before you get to your staging date. This means understanding:

• what information you need to put in
• how to configure it
• what outputs the software will give and how

You’ll need to test the software ahead of your client's staging date to ensure you understand how it works, and to check that you know where to find all the information you’ll need.

Maintaining up-to-date records

For bookkeepers it no doubt goes without saying that it's crucial for your client to hold accurate information about their staff, their personal and address information and the contributions that have been made on their behalf.

Inaccurate records or missing data can have serious consequences, which can include staff being automatically enrolled at the wrong time, information about automatic enrolment not getting to the staff member, and the wrong amount being paid to their staff at retirement. It is their responsibility to ensure that records are correct and up-to-date.

Reviewing Existing Pension Arrangements

This is the key part of the process that cannot be performed by a bookkeeper. The business owner needs to find a qualifying auto-enrolment pension scheme that will fit their circumstances. It is strongly recommended that independent financial advice is sought due to the complexity of the pensions market.

You can direct your client to TPR's website here: setting up a pension scheme.

Finding out how much it will cost

It is likely that the first question your client asks you is how much will it cost?  It is compulsory for your client to make an employer contribution to the pension of each auto-enrolled and opted-in employee based on a percentage of their earnings. 

The minimum amount that an employer must contribute is being phased in, starting at 1% and rising to 3% of staff’s qualifying earnings- for more information visit TPR's website here contributions and funding.

Your client should bear in mind that there may be other costs involved depending on their pension provider and the scheme they choose.

TPR has an employer contribution calculator tool on its website where you can input detailed information about employee earnings such as maternity pay and bonuses, however it does not provide information about the minimum contribution required during the 'phasing-in' period. We recommend that you also refer your client to the contributions calculator available on the Money Service.

www.thepensionsregulator.gov.uk/employers/tools/employer-contributions.aspx

www.moneyadviceservice.org.uk/en/tools/workplace-pension-contribution-calculator

Raising Awareness amongst the Workforce

It is a great idea for your clients to engage with their workforce about auto-enrolment. As well as generally discussing the topic there is an obligation to write to each employee within one month of the business's staging date stating how the new scheme will affect them. Template letters can be generated using this tool on The Pensions Regulator website:

http://www.thepensionsregulator.gov.uk/employers/letter-templates-for-employers.aspx

Once your client's staging date comes around they'll need to carry out two tasks:

1. Automatically enrol eligible job holders on the chosen pension scheme
   Deadline: six weeks from staging date
   
   
2. Notify TPR by completing the Declaration of Compliance (registration)
   Deadline: five months from staging date

By this stage, you should have the necessary systems in place to generate this information automatically.

1. Enrolling Eligible Jobholders

Eligible Jobholders should have already been identified when the scheme itself was being set up. Now all your client needs to do is provide the scheme with whatever information it needs to get their membership up and running. 

2. Completing the Declaration of Compliance (registration)

It is a legal requirement for your client to submit information to the regulator about how it has complied with the employer duties. If your client does not provide the information required via the Declaration of Compliance they may face enforcement action and incur a fine.

The registration can be completed online here:

> www.autoenrol.tpr.gov.uk

A video explaining the registration process can be found here

> https://registration.livegroup.co.uk/EventWebsites/registration/downloads/capita/

Keeping Records 

Certain records must be kept about members of staff and about the pension scheme. Some of these will be kept by the pension scheme, some must be kept by the employer. These include:

• names and addresses of staff automatically enrolled
• the contributions payable to the pension scheme and when they were paid
• any opt-in or opt-out notices received
• name and address of the pension scheme
• employer pension scheme reference or pension scheme registry number

Make sure that your client knows what these records are and where to get them from. Your client will also need to decide how they'll store them so that they can easily access them. They'll need to be able to produce these records if TPR ever asks to see them. Keeping records is good governance and is proof that your client carried out their duties.

These records must be kept for a specified time, which in most cases is six years.

Paying contributions

You'll need to deduct and pay regular contributions into your client's staff members' pensions. 

Processing opt outs

Staff that are automatically enrolled have a right to opt out if they decide they don't want to be in the pension scheme. They have a month from being enrolled during which they can opt out and receive a full refund of any contributions they've made.

Your client must ensure that opt-out requests are processed promptly, including issuing any refunds.

See Opting out on the TPR website for more information. 

Processing opt-in requests

Some staff who weren't automatically enrolled can choose to opt in, or ask to join the pension scheme. Your client must process these requests straight away and enrol them into a pension scheme.

Visit the TPR website to read more about Opting in and joining 

Your client must pay regular contributions to the pensions of staff who opt in.

Monitoring ages and earnings

The business software (or pension provider) should be set up to monitor the ages and earnings of each member of staff and send an alert if any of their rights change, eg. by turning 22, or their earnings changing, as your client's duties in relation to them will change. This age and earnings check must happen every time you run payroll.

Their earnings are important - if a member of staff is earning under £10,000 and has an increase in salary over this amount, they'll need to be automatically enrolled.

Assessing new starters

When anyone new starts working for your client, you'll need to check whether they're eligible for automatic enrolment. If they are, you'll need to enrol them into your client's pension scheme following the same process as you did at staging or after postponement.