Home News Don’t fall foul of auto-enrolment legislation

Don’t fall foul of auto-enrolment legislation

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Workplace Pension

A national recruitment agency, its directors and senior staff have been ordered to pay more than £280,000 for plotting to illegally opt workers out of their pension scheme.

The prosecution of Workchain – formerly known as Smart Recruitment UK – has led to the largest fine and first custodial sentences for a case brought by The Pensions Regulator (TPR).

The company, two directors and five senior staff all pleaded guilty to the  offences in Derby Crown Court. Some of them received suspended prison sentences of up to two years.

Rob Johnston, Chief Executive of Cumbria Chamber of Commerce, said: “This is an extreme example and what the judge described as ‘deliberate subversion of the automatic enrolment process’.

“But it underlines that employers have responsibilities under auto-enrolment legislation and there will be sanctions and penalties if these are ignored.

“Those responsibilities are ongoing and don’t end when the employer sets up a pension scheme for staff.”

ONGOING DUTIES

Each time you pay your staff you should carry out the following tasks:

Monitor the ages and earnings of your staff

You must monitor the ages and the amount you pay your staff (including new starters) to see if you need to put any of them into a pension scheme. You must put them into a pension scheme and write to them within six weeks from the day they meet the age and earnings criteria.

If you have any staff who are…

  • aged between 22 up to state pension age
  • and earn over £10,000 per year, or £833 per month or, £192 per week

… you must put them into your pension scheme and you must both pay into it.

Manage requests to join or leave your scheme

If any of your staff, who can ask to join your scheme, write to you asking to do so, you must put them into it within a month of receiving their request.

You will have to pay into the pension scheme unless they are:

  • aged 16-74
  • and earn less than £503 a month or £116 per week.

To find out how much you will need to pay you should ask your pension scheme provider.

Your staff can choose to leave your pension scheme after being put into one. If they do ask to leave within one month of being put into a scheme, this is known as opting out. Many pension providers will manage the opt out process on your behalf, speak to your provider if you’re unsure. If any of your staff opt out, you need to stop taking money out of their pay and arrange a full refund of what has been paid to date. This must happen within one month of their request.

Keep records

You must keep records of how you’ve met your legal duties, including:

  • the names and addresses of those you’ve put into a pension scheme
  • records that show when money was paid into the pension scheme
  • any requests to join or leave your pension scheme
  • your pension scheme reference or registry number

You must keep these records for six years except for requests to leave the pension scheme which must be kept for four years.

Maintaining contributions

Once you have set up a pension scheme and put your eligible staff into it, your legal duties don’t end there. You must continue to make the payments that are due into the scheme every time you run payroll. We monitor the contributions that are paid into workplace pensions and can tell if payments that are due are not being made into your staff’s automatic enrolment scheme. We will take action if you fail to comply with your ongoing legal duties, and you may need to backdate any missed payments.

Contributions increases April 2019

From April 6, 2019, by law the minimum amount you pay into your staff’s pension will go up. You must pay a minimum of 3% of a portion of your staff’s earnings* into their pension, and the total combined payments made by you and your staff must be no less than 8%.

*The law requires that, as a minimum, pension contributions will be based on your staff’s earnings between £6,032 and £46,350.

Re-enrolment

Every three years you’ll need to put staff back into your pension scheme if they have left it, and if they meet the criteria to be put into a pension scheme. This is known as re-enrolment. The Pensions Regulator should write to you in advance of your re-enrolment date to explain more.

© Cumbria Chamber of Commerce