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Pegasus Blog

Auto enrolment FAQs

DATE

October 8, 2013

Auto enrolment of pensions was introduced a year ago and since then, 1.6 million employees have been automatically enrolled into a pension scheme. However, a pensions survey by the Chartered Institute of Personnel and Development (CIPD) revealed that a third of employers still don’t know when they need to implement auto enrolment changes or how. If you’re one of them, take a look at our auto enrolment FAQs guide for employers which aims to answer your questions and concerns.

What is auto enrolment?

Auto enrolment is a government initiative designed to help people save for their retirement. As an employer, it’s your duty to enrol your employees into a workplace pension scheme and help them save. See our blog post What is auto enrolment and how will it affect your company? to learn more. 

Why has auto enrolment come into effect?

People are living longer yet too many people aren’t saving for their retirement, therefore, the government has bought in the auto enrolment initiative to help employees, particularly those on lower incomes.

When should we auto enrol our employees? 

The date at which you must start your auto enrolment duties and auto enrol your employees is known as a staging date. Staging dates span from October 2012 to 1 April 2017 and are determined by organisational size (starting with the UK’s largest employers). The Pensions Regulator will write to you 12 months before your staging date and again three months before. If you haven’t received your staging date yet, you can check it online using the Pensions Regulator’s staging date calculator. For more information about staging dates, take a look at our blog post When is your auto enrolment staging date and what do you need to do? Don’t forget, you can always start your auto enrolment duties before your staging date to get ahead of the game! 

Who do we need to auto enrol? 

You only need to auto enrol your eligible jobholders. These are employees aged between 22 and state pension age with annual earnings over the auto enrolment threshold (£9,440).You don’t need to auto enrol your non-eligible jobholders and entitled workers into a pension scheme, but they can opt in if they wish. If you need help assessing your employees, read Assessing your employees for auto enrolment of pensions.

What is a qualifying pension scheme? 

A qualifying pension scheme is a pension scheme which meets certain minimum requirements. It must have the ability to auto enrol employees. Opera 3 caters for National Employment Savings Trust (NEST) Pensions, which is a qualifying pension scheme. Learn more about NEST Pensions  and its integration with Opera 3.

How much will we need to pay? 

The Government has set minimum amounts that employees and employers must contribute. The minimum requirements are being gradually phased in.

Up to 30 September 2017: the minimum contribution for employers is 1%

1 October 2017 – 30 September 2018: the minimum contribution for employers is 2%

1 October 2018: the minimum contribution for employers is 3%

What happens if our employees opt out? 

If your employees opt out of the pension scheme then you will no longer need to make contributions towards it. However, you do have a duty to automatically enrol any employees who opt out, back into the scheme every three years or less. 

We already provide a pension scheme. Do we need to do anything? 

If you’re using a qualifying pension scheme then you can continue using it, but you will need to auto enrol eligible jobholders who aren’t members. It's also important to note that you'll need to communicate the changes to your employees. If you’re not using a qualifying pension scheme then you’ll need to change it to one that meets the guidelines.