25/03/2015

By Paul Budgen, NEST


Have you received a letter from The Pensions Regulator about auto enrolment? Did you read it thoroughly or did you simply skim and dismiss it? If it’s the former, your auto enrolment planning will probably be well underway. If it’s the latter then it’s time you dig it out because you may be one of the 45,000 employers who will need to auto enrol workers into a workplace pension this year.

Our recent NEST insight 2015 report shows that 91 per cent of small and 85 per cent of micro employers are aware of auto enrolment. Good news? Yes… however, the findings also showed that 82 per cent of employers don’t fully understand auto enrolment means for them or their business.

Are you one of them?

If so, don’t worry as this echoes what many employers tell me when I’m out and about. So here are three things to consider when preparing your business for auto enrolment.

Fact-finding: when and who?

The first thing you should look at is when you need to auto enrol your workers. This will be in your letter from the Pensions Regulator or you can visit their website and find out. Once you know this date you can begin to plan out your approach.

You also need to determine who needs to be auto enrolled. You will need to enrol all eligible workers who are not already in a qualifying scheme. An eligible worker is:

• Aged between 22 and the state pension age
• Working in the UK
• Earning above £10,000

It is important to know that other types of workers can ask to be enrolled and you may need to make contributions for them too.

Pay – rates and frequency

Pensions and payroll go hand-in hand. It’s where you find out who needs to be automatically enrolled, how much their contributions are and then process the contributions. With that in mind, looking at your payroll processes may help ease the way for auto enrolment.

According to our research, 64 per cent of employers pay their workers monthly and 34 per cent pay their workers weekly. Auto enrolment requires employers to check the eligibility of their workers every pay period and make adjustments to their contributions accordingly. An employer who pays their workers on different frequencies and at different intervals may have to do this several times a month. So you may decide that aligning pay periods streamlines the process for you.

Telling your workers

The report findings also show that most workers are supportive of auto enrolment. In fact, over three quarters of people we surveyed think it is a good idea. So they may be eagerly waiting to find out what auto enrolment means for them. This forms part of your responsibility as an employer. You’ll need to do this in writing, either by email or on paper.

There’s a lot you will need to shed light on so we’ve made things easy by creating ready-to-use templates. Telling your workers should help them to understand how the changes will affect them, so they’re not left in the dark. By communicating clearly you may also limit the number of questions you are asked by your workers.