Auto-Enrolment : Common Questions

Posted 24 Aug 16

Every year many small business owners are filing their auto-enrolment for the very first time. Although it is a task we all do, still many questions arise just as the deadline fast approaching. As a company director you need to ensure that all your paperwork is organised and delivered to the right address at the right time.

The majority of accounting and bookkeeping mistakes occur due to misunderstanding of requirements of failure to commit to documents organisation on a regular basis. In this article we answer the most common questions small business owners have about auto-enrolment.

Although the auto-enrolment is now four years old, every year there are still some misconceptions and doubts many employers have, even those experienced in running their companies. If you are hiring employees, you need to understand what rights and responsibilities they have and what obligations you have towards them.

Do I have to offer a pension to every member of staff?

One of the most often question our clients ask us is who amongst their employee is pension-eligible. The short answer to this questions is: everyone, apart from those under 16s and over 75s. However, to get a clearer understanding of the pension scheme, you need to separate your employees into three groups:

Eligible

Non-eligible

Entitled

Eligible workers are:

Those who aren’t already in a qualifying pension scheme at work

Aged at least 22 but under state pension age

Work in the UK

Earn more than £10,000 per year

Non-eligible workers are:

Aged at least 16 but under 75

Work in the UK

Earn more than £5,824 in a year

Entitled workers are:

aged at least 16 but under 75

work in the UK

earn less than £5,824 in a year

Once your workplace is properly assessed, you need to understand your responsibilities towards each group.

All eligible workers are automatically enrolled into a workplace pension scheme. You will be responsible to contributing to their pension personally. At this time, the minimum contribution stand at 2 per cent of a workers’ qualifying earnings, but over the next few years the percentage will likely increase. Workers have a right to increase their own contribution.

Those who do not automatically fall under your workplace pension-scheme can still request it. Your entitled employees can ask to join the scheme, but unlike in the other two groups, you do not need to contribute to their pots.

How do I tell my workers that I’m putting them into a workplace scheme?

Once you decide which pension scheme is best for your company, you must communicate the details to your employees. It is legally required that you provide the information to them in writing.

Communication is a key to creating a healthy and productive working environment. Employees who receive clear and engaging information about their pension from their employers are more likely to value their workplace and engage in life of the company more.

If you have any other questions about the auto-enrolment process we didn’t answer in this article, contact our experts at Tawanda Accountants today and we will clear all your doubts out for you.

About Us

As a leading UK accounting firm and expert business consultancy, Tawanda Accountants carry out scrupulous accounting and provide payroll services and procedures for small businesses, individuals and business start ups.