The clock is ticking for all employers in the UK with pension auto enrolment. The process began in October 2012 with very large companies and from now until 2018 the process affects small businesses. The role of HR with pension auto enrolment can be quite key due to the high administrative requirements. Planning ahead is essential to ensure statutory deadlines are met.
The CIPD code of conduct states that HR professionals can not provide on pension schemes, but as HR often has an administrative role to play in most employer businesses the support with pension auto enrolment can be invaluable. An in house HR Manager or external HR consultant with auto enrolment proficiency can help streamline what may seem to be an administrative nightmare.
The key HR responsibilities in auto enrolment will include:
Identifying workers eligibility based on age and salary criteria. Workers aged 22 to retirement age and who, 2015-16 earn £10,600 are deemed to be eligible workers. Non-eligible workers are 16-22 and from state pension age to 75. Entitled workers are those who earn £5824.
Provide workers with information about auto enrolment. This will take the form of an appropriately worded letter. Additional ways to provide information can be with presentations, lunch and learn sessions, posters, email communication and face to face consultations.
Arrange deductions in pay with effect from the auto enrolment date, unless the process has been brought forward. Contributions are based on qualifying earnings. This is defined as gross earnings and can include bonus, commission, overtime, etc within a band 2015-16 will be set at £5284 and £42,385. Employers must make contributions of at least 1% for eligible and non-eligible workers, but do not have to make contributions to entitled workers.
Manage opt outs. It is illegal for an employer to encourage opt out of a pension, and currently 9/10 employees remain auto enrolled, nevertheless some employees may feel they do not want to be in a pension scheme. Workers can not opt out before they are auto enrolled, but need to be able to access an opt out form and understand the process that needs to be followed. If a worker opts out within the one month period HR must inform the scheme, stop payroll deductions and arrange for contributions to be refunded.
Inform the Pension Regulator about compliance. Within five months of the staging date HR will have to provide a compliance declaration to the Pension Regulator, this is a legal requirement. This will include contact details, business details, pension scheme information
Keep records which will include opt outs and opt in notices, enrolment and contribution information. Records have to be kept for six years except opt out notices that are kept for four years.
The process is continual. HR needs to remain vigilant to ensure that workers that become eligible due to age and salary changes are auto enrolled. Should salary changes tip the balance of a worker becoming eligible for auto enrolment, once auto enrolled they remain in the pension scheme unless they opt out.