Auto-Enrolment

Last month we provided you with advice on establishing your company’s staging date for auto-enrolment. This is the important first step to planning for auto-enrolment.   This guidance sets out the next steps once your staging date is confirmed.

Assessing your workforce

All employers with 250 employees or less will have to comply between April 2014 and May 2017.  It is important to assess your workforce in order to understand the worker categories for auto enrolment. 

What is a worker?

Your duties as an employer extend to all workers within your business, but not as far as contractors or self-employed individuals who may be working with you for a limited period. A ‘worker’ is defined by the contractual agreement that you have in place with an individual and as a general rule individuals are likely to be considered a worker if they:

·    Work under a contract of employment, or

·    Have a contract to perform work or services personally and  not undertaking the work as   part of their own business.

There are often many types of workers within each organisation, including permanent, temporary, fixed term and casual. 

Worker categories for auto-enrolment

Workers will be organised into 1 of 3 groups for auto-enrolment purposes and you will need to ensure that you have the following details for each member of your team:

•       The workers age

•       Whether the worker is working or normally works in the UK or overseas

•       The workers earnings

This information will place each individual worker into one of the auto-enrolment categories listed below:

Earnings	Age
	16 - 21	22 - State pension age	State pension age - 74
Less than £5,772	Entitled Worker
Between £5,773 - £10,000	Non-eligible Jobholder
£10,000+	Non-eligible Jobholder	Eligible Jobholder	Non-eligible Jobholder

1. Eligible Jobholder

•       This category of worker will be automatically enrolled

•       Employee has right to ‘opt out’

•       Employer MUST make the minimum contributions

 2. Non-eligible Jobholder

•       Will not be automatically enrolled

•       Employee has right to ‘opt in’

•       Employer MUST make minimum contributions

3. Entitled Worker

•       Will not be automatically enrolled

•       Employee has right to apply

•       Employer NOT required to make contributions

Tamar HR’s view

Generally most employers will already have the required information in place through their payroll systems, but if not it’s a good opportunity to update your records.

Many payroll systems will automatically determine the relevant categories.  Your chosen pension provider may also provide advice. Different pension providers will offer different levels of support, so it’s worth doing some research on the available options and take advice from a financial advisor to ensure that you are getting the best scheme that is available to your business.

 
Next month we will be taking a look at the contribution levels for auto-enrolment and making you aware of both the employer and employee percentages both now and in the future. This can help with financial planning and forecasting.  If you would like to discuss auto-enrolment for your business in more detail, please don’t hesitate to contact Matt at Tamar HR, who will be happy to provide you with support.