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Four Common Errors of Auto Enrolment Administration

2017
31
JUL

Pension Auto EnrolmentPension auto enrolment is in place for a good proportion of employers now but even if you have already reached your Staging Date or are about to reach it is worth being aware of these four common errors .

Making incorrect deductions from your employees' pay

Incorrect set up of the pension scheme within the payroll could be costing the business and the employee more than is necessary.

Pension deductions should be taken from "qualifying earnings" and not from "total earnings" unless your scheme has been set up to use "total earnings".  Most pension schemes are set up using "relief at source" meaning the deductions should be taken on earnings in excess of £490 per month and after Tax and NI deductions.  If deductions are made from "total earnings" both the employer and the employee are paying more than the minimum required contribution into the pension scheme.

Forgetting to write to your employees within 6 weeks of their start date

If you have already reached your Staging Date don't forget to write to your new employees to tell them about your Pension Scheme.  You have up to 6 weeks to do this and you must tell them specific information about the Scheme.

If you want to postpone your new employee whilst they are on a probationary period you can for up to 3 months. However an employee can only be postponed if they have received a letter within 6 weeks of their start date informing them that postponement is being used and the date the postponement period ends.

Using postponement incorrectly

An employee who was not previously eligible to join the pension scheme may suddenly become eligible to be automatically enrolled due to a spike in their earnings one month.  The employer may wish to postpone this employee so that they are not automatically enrolled but can only do so if they issue a postponement notice to the employee within 6 weeks of them becoming eligible to be auto enrolled.  

The employee does has the right to "opt in" to the pension scheme if they want even if you want to postpone them.

You haven't set up a Pension Scheme because your employee doesn't want to join

Even if your employee tells you they do not wish to be included in the pension scheme you still need to set up a scheme and enrol them if they meet the criteria of an eligible job holder.  An employee cannot "opt out" of a scheme until they have been enrolled into it and received a pack from the pension provider.  Once they receive a pack they will then have the necessary information to be able to "opt out".  If they "opt out" within the first 4 weeks they will receive their contribution back in the following pay run.

Karen Reynolds, Sandra Silk BookkeepingAdministering your pension scheme requires organisation and an understanding of the rules and time frames. The more experience we have of setting up and administering auto enrolment the more we see how easy it is to forget to do something.  Employers who have frequent new starters or employees with fluctuating earnings need to have a good process in place to ensure communications, set up of new employees in the scheme, processing of payroll and uploading of information to the pension scheme are carried out within the time scales The Pension Regulator has set. 

We provide an ongoing auto enrolment administration service so that we can take the responsibility on behalf of employers for the procedures and time scales set by The Pension Regulator.  And if you haven't set up your pension scheme yet we can help with that too.

 

If you would like the peace of mind call our Auto Enrolment Administrator, Karen Reynolds, on 01722 341820.

 

 

Related Tags:  Auto Enrolment |  Employer |  Pension Regulator | 
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