Pensions Auto Enrolment FAQs

Having toured the country presenting Auto Enrolment Workshops we thought we would share some common areas of concern and practical points. On these Workshop courses delegates we able to share their concerns and experiences so we have included in this blog some of the things delegates found most useful and some practical points we shared. With many delegates acting for employers whose staging dates start rolling out from next summer (2015)and beyond, and some with a few payrolls having just passed their staging date and in the postponement period, there is a lot to think about.

The Pensions Regulator advise that employers need to start planning 12 to 18 months ahead of their staging date and should ideally have things in place (a pension scheme, provisional assessment of workers, started the communication process with workers and checked payroll compatibility) six months before staging, so it may be time for you to start advising your clients of their responsibilities and the costs involved. Here is a link to our AE page which details the resources we have available to help you to help your clients http://www.mercia-group.co.uk/ae/

Most well received advice

Postponement is your friend.......

• For new starters
• For casuals
• For those turning 22..... consider postponement to last full pay period in the three months postponement window ( to give the employee time to opt out if they want to and allow alignment with the tax month/week)
• If your staging date is 1 March postpone at least until 6 April so using one tax year's limits rather than potentially having to amend contributions after a month.

Most agreed with comments

'The TPR have been concentrating on large employers, watch out for further guidance over the next 12 months dealing with smaller employers issues.'

'This is a much bigger issue than dealing with RTI compliance.'

'Employers need to start budgeting for additional costs; some will inevitably divert the next few pay rises into pension payments and blame the Government.'

'Checking the worker's status each pay reference period for changes in ages and earnings (which trigger eligible jobholder status) has to be carried out by software and cannot be a manual process.'

Question and issues raised by delegates

• The employer makes pension contributions into some personal pension plans. How do we check whether these are compliant with AE? Is it the employee's responsibility to check?

It is the employer's responsibility to check so visit http://www.thepensionsregulator.gov.uk/employers/dc-qualifying-scheme-tool.aspx

Employers may need to set up a pension scheme which is AE compliant, those employees wishing to continue with their personal pension could chose to opt out.

• Can we go in earlier than our staging date so we can practice Auto Enrolment on our own payroll?

Yes however the employer and employee will start paying contributions sooner so additional costs will be incurred. It may be worth it for the experience gained.

• We have difficulties extracting the correct pay data from the payroll for the pension schemes CSV file? Has anyone else had similar issues?

Depends on how complicated a payroll it is. For example how many pay fields are needed and the basis of the contributions (certification or band earnings).

• Can we postpone and then collect opt outs from employees during our postponement period?

By using postponement you give employees time to make a considered opinion of their options and the employer time to process the paperwork - so yes.

• What about casuals?

They still need to be assessed on their first day of employment, consider postponement.

• We know one director companies with no staff don't have to comply with AE but what about multiple director only companies? Can the 'wife' be Company Secretary?

We have put the question to the Pensions Regulator - see Phil William's excellent blog on this subject. We are hopeful that further clarification will be issued on this and other areas as TPR and the professional bodies turn their attention to the smaller employer.

We are planning further workshops later this year but if you can't wait that long we do have a pre-recorded webinar available. Details of which are on Mercia's dedicated AE page.

By Shan Hughes and Pat Nown