• Identifying who will be affected – and who will need to be auto-enrolled;
• Communicating with your staff – as to how they will be affected;
• Planning for your staging date – to ensure your payroll is ready for auto-enrolment;
• Selecting the appropriate pension provider – based on your requirements/people;
• Explaining the financial impact of auto-enrolment – on your profit/cash flow;
• Advising on salary sacrifice – and how you and your staff could benefit from salary sacrifice schemes (e.g. employee benefits, share ownership, pension);
• Run the scheme as part of the payroll package – calculate contributions as part of the weekly/monthly payroll scheme 

What is auto enrolment pension?

The law on workplace pensions has changed.

All employers are now legally required to automatically enrol certain staff into a pension scheme and make contributions.

Employers also have to tell their staff about the scheme you put them in and allow other staff to join if they request to do so.

It is essential that each employer finds out how these new duties will affect their organisation. The Pensions Regulator (TPR) will write to each employer to let them know the date that the duties will first apply to them. This is known as the 'staging date'.

The staging date for each employer is based on the PAYE reference and can be found by using The Pensions Regulator Staging Date Calculator. 

From their staging date, employers must then automatically enrol eligible employees (depending on age and salary level) into a pension scheme. Some workers will also have the right to ask their employer to enrol them.

Employers are required to make contributions to this pension scheme, adding to the contributions made by their workers.

Employers will have to make regular payments into the pension schemes of all staff who automatically enrol and all those who choose to opt in.

Who should be automatically enrolled?

Automatic enrolment is the main employer duty. It's called automatic enrolment because employers will need to enrol certain staff into a pension scheme 'automatically', without those staff having to do anything.

Employers must assess all workers for eligibility or employers may choose to enrol all workers automatically. 

Figures correct as of 2014/2015. * SPA = state pension age

You must automatically enrol everyone working for you:

• who is aged between 22 and state pension age
• who works in the UK
• for whom you deduct income tax and National Insurance contributions from their wages
• who is likely to have gross earnings over £10,000 in a year.

?How to automatically enrol your staff

Step 1: You will need a pension scheme

To be able to fulfil your automatic enrolment duties, you'll need to put a pension scheme in place. It's important that you choose the right one.  

Our adviser will help you choose the right pension scheme provider suitable to your requirements.

Step 2: Providing information

Once you have a scheme in place, there are a few things you'll need to do.

• Provide information to the scheme provider about the staff you'll be automatically enrolling, such as their:
  • name
  • address
  • date of birth
  • National Insurance number.
• Provide staff with specific information about:
  • automatic enrolment
  • their right to opt out after they've been enrolled.

If your scheme is a 'personal pension scheme' you'll have one more step: 

Make sure that the provider has sent the scheme's terms & conditions to each person you'll be automatically enrolling.

This is a vital part of the process as it sets up the policy between the provider and your staff member. Without it, you won't have fulfilled your duties.

Step 3: Processing opt outs

Staff have the right to 'opt out' of pension scheme membership after they've been automatically enrolled.

If a member of staff decides to opt out, they must complete a form called an 'opt-out notice', which they get from the pension scheme, and give it to you.

They will only have 1 month after being automatically enrolled to opt out. If they do, they will be treated as though they had never been in the pension scheme. Any contributions made to the scheme will be refunded.

After the end of the 1-month opt-out period, staff are, of course, free to leave the scheme at any time.

Important: Opting out only applies to staff. You cannot opt out of your employer duties.

If you receive an opt-out notice you must:

• make sure the notice is fully completed and signed
• send the opt-out notice to the scheme and keep a record of it yourself
• stop the deduction of pension contributions for that staff member with immediate effect
• refund any contributions already deducted to the staff member in the next payroll
• arrange with the scheme for a refund of any employer contributions you've made for that staff member.

How will it work? 

They want to ease people into the scheme gently so in the first four years, minimum contributions as a percentage of earnings will be just 2%, made up of 0.8% from workers, 1% from employers and 0.2% coming from tax relief.

All firms will eventually have to contribute at least 3% of their employees' salary, with workers contributing 4%, and 1% coming from tax relief, making 8% in total.

Workers would typically gain an extra £600 a year on top of their salary as a result of money paid by their employers into their pensions.

As an example: 

John earns £12,000 a year (£1,000 a month before tax) and is paid monthly.

1. He pays in the equivalent of 4 per cent of his salary into his workplace pension (£40 a month). This is taken directly from his monthly pay. 

2. His employer pays in the equivalent of 3 per cent of his salary (£30 a month). 

3. The government, in the form of tax relief, pays the equivalent of 1 per cent of his gross salary (£10 a month). 

So the total contribution to John’s pension pot is £80 a month.