THE PENSION REGULATORQUARTERLY MESSAGES FOR EMPLOYERS
Re-enrolment & Re-declaration: A 2-Stage Process
Make Sure You Know What to Do – Don’t Risk a Fine
Over the coming months hundreds of thousands of small and micro employers will reach their re-enrolment deadlines.
Re-enrolment means staff who opted out of their workplace pension are put back in by their employer. It’s an important task because it means these staff are given fresh encouragement to save for their retirement.
Whether or not you have staff that need to be put back into your workplace pension, you must complete and submit a redeclaration of compliance to The Pensions Regulator (TPR).
Most warning notices issued by TPR are because an employer has missed their re-declaration deadline. In most cases they have completed their re-enrolment duties, but failed to tell TPR what they’ve done by submitting their re-declaration of compliance.
Two Stages of Re-Enrolment
Choose your re-enrolment date, assess your staff, then write to those you have re-enrolled, informing them that they have been put back into your pension scheme.
Complete and submit your re-declaration of compliance within 5 months of the 3rd anniversary of your previous re-enrolment date.
Tax Relief and Workplace Pensions: RAS or NPA – Do You Know the Difference
Automatic enrolment is a legal duty that requires all employers to put certain staff into a workplace pension and make contributions to it.
When choosing a pension scheme for your staff, it’s important that you are aware of the two different tax relief options used by pension schemes– RAS (relief at source) and NPA (net pay arrangement), so that you can choose the scheme best suited to your staff – the one used by your pension scheme may affect higher and lower earners in different ways.
Tax Relief Arrangments
There are two ways that members may receive tax relief on pension contributions:
Relief at Source: the employer takes members’ contributions after taking tax from their pay. The pension provider then adds tax relief of 20% to members’ pension pots.
Net pay arrangement: the employer takes members’ contributions from their pay before it is taxed. Members only pay tax on what’s left. This means members get full tax relief unless they don’t pay tax.
Be aware that if a net pay arrangement is applied, lower paid workers will not benefit from tax relief.
The Pensions Regulator has useful information and examples on their website that will help you to decide which pension scheme to use.
Maintaining Contributions – Make Sure Your Workplace Pension Contributions Are Paid on Time
Once you have set up a pension scheme and put your eligible staff into it, your legal duties don’t end there. All employers must continue to make the payments that are due into the scheme every time payroll is run.
It is important you do this as failure to make the correct payments is likely to lead to enforcement action by The Pensions Regulator (TPR). Don’t risk a fine
Three Steps to Help You
Make sure your payroll calculates and deducts contributions at the right rate from your staff’s salaries, and ensure that records are kept of the payments.
Make sure you know the date your contributions are due to your pension scheme provider, so that you can ensure the payments are paid across on time.
If your payroll is automated, make sure your payroll system is compatible with your pension scheme.
TPR can tell whether contributions are being paid into workplace pensions and if payments due are not being made into your staff’s automatic enrolment scheme. TPR will take action if you fail to comply with your ongoing legal duties, and you may need to backdate any missed payments.
TPR have useful tools, information and guidance on their website to help you understand your ongoing duties.
The Pensions Regulator Continues to Carry Out Automatic Enrolment Compliance Spotchecks on Employers
Compliance spot checks are being carried out by The Pensions Regulator (TPR) on some of the UK’s largest employers to ensure thousands of staff continue to receive the pensions they are due.
TPR is inspecting a number of large employers who were among the first required to comply with automatic enrolment when the roll-out started in 2012. So far, several large firms including banks, local authorities, supermarkets and national charities have been visited to check they are still doing the right thing for nearly half a million employees.
TPR’s Director of Automatic Enrolment, Darren Ryder said:
“Compliance with the law remains high and these inspections help ensure that employers are continuing to meet their ongoing duties, including re-enrolment.
Millions of staff depend on employers to do the right thing so that they do not miss out on the pensions they are entitled to.”
TPR will use information gathered from the inspections to identify any common themes and lessons to be learned”.