Automatic enrolment:
are you ready?
Overcome obstacles and
discover new opportunities
The journey so far
The at-a-glance guide to
meeting your obligations
You might know all the ins and outs of automatic enrolment (AE)
already. It’s been around since 2012, following the introduction of
a law by the UK government. Under it, all employers must offer a
workplace pension scheme, and automatically enrol their eligible
workers. The largest companies went first, achieving compliance
in 2012, with other businesses following suit. And by 2018, every
employer in the UK must comply with AE obligations.
If you’re going to comply now and in the future you need to
meet certain obligations. From assessment and enrolment to
management and communications, you’ve got to stay on top of your
duties. And you’ll have to keep records about how you’re doing so.
63%
Even if you have already launched AE for your employees there are
still things you need to do. For instance, to remain compliant you
need to keep assessing non-eligible employees and new starters
and to maintain communications with staff. You also need to be
aware of the date of your next formal three-year re-assessment.
If you don’t you could be facing some hefty fines.
Assessment and enrolment
Firstly, you need to assess all workers for their eligibility. If they’re
over 22 but under the state pension age and they’re earning over
£10,000 a year, they are eligible. Once you’ve completed these
assessments you need to enrol everyone to whom the rules apply.
This must be done by what is called your ‘staging date.’
So how are you meeting your duties?
Throughout this white paper, you’ll find a recap of your duties
and the challenges to comply. You can access key solutions and
discover whether an in-house DIY solution or a fully
managed approach would be best for your business.
What happens if you miss these targets? If you don’t uphold your
responsibilities, the penalties are severe. The Pensions Regulator
can issue fines and even jail sentences.
63% of companies found AE
more difficult than they anticipated,
according to a 2014 study carried
out by the National Employment
Savings Trust (NEST)1
Communications
Next, you need to keep your employees informed at every stage.
This is a legal requirement, and you have to do it in writing.
Your workers will want to know the effects of enrollment and their
entitlements – so it’s your duty to maintain communications.
Making payments
This is the most important part for your employees. What you and
your employees pay in will change according to each individual’s
earnings and in line with any increases set by the government.
Manage and administer opt-outs
Not all your employees will want to be part of a pension scheme.
Some of them will want to opt out. You and your pension provider
will have to manage this through your AE communications and
management processes, making sure anyone who opts out officially
exits the scheme.
If employees opt out, don’t forget to reverse any pension deductions
correctly from their pay, and apply the opt-out status to their payroll.
On-going management
AE isn’t as simple as ticking boxes once a year. You’ll need to have
constant staff reviews and ensure that all employees are enrolled,
including those who have just joined. These checks must be made
each pay period. And to make audits easier you should keep tight
control over all records.
Third-year re-enrolment
The third-year re-enrolment process addresses those employees
who opted out or ceased membership over the last three years
(although the most recent year can be ignored if you as employer
choose to do so). As part of this process, you need to give your staff
all the relevant information – again. If they don’t opt back in they will
be auto-enrolled and would then have to opt out again if that were
their wish.
Declare compliance
Complying isn’t enough. You need to prove that you have done so
and be confident in your record keeping. So you’ll have to complete
a declaration of compliance. This too needs to be done every three
years. If you fail to meet these requirements you could be fined.
Obligation checklist
• Assess and enrol employees
• Manage pension contributions
• Handle opt-outs
• Communicate information
• Declare compliance
1
NEST 2014 Study: https://www.nestpensions.org.uk/schemeweb/NestWeb/includes/public/docs/NEST-insight-2014,PDF.pdf
Facing the challenges
Sourcing a solution
Third year re-enrolment
AE isn’t just a case of ticking boxes and sending out emails.
It can be challenging to set up and to maintain. You need to
consider the entire process – from carrying out assessments,
to meeting deadlines.
The duties you’re now facing are a challenge in themselves. And
that’s without taking into account the time, budget and resource you
need. The first stage has around 33 tasks, all of which can take up to
103 days to complete .
You must be ready to meet the following challenges:
Employee assessments
The first stage is correctly assessing your employees and placing
them into the right category. Different factors will affect this
assessment, such as their salaries. And then each category
needs a different action.
Your challenges don’t end with meeting your staging date.
After three years there is a re-enrolment process to address the case
of those employees who opted out or ceased membership over the
last three years. (However, the most recent year can be ignored if
you as employer choose to do so).
All staff to whom re-enrolment applies need to be contacted and
informed. If they don’t opt back in of their own volition they need to
understand that by law they will be re-enrolled anyway – and if this
is something they don’t want they will formally have to opt out once
more. They will have just one month in which to do this after the
cyclical automatic re-enrolment date (as it’s known).
You’ll need to put plans in place in advance of the three-year
deadline so as to be sure of completing this process when the
time comes. These plans include fixing the cyclical automatic
re-enrolment date, engaging with pension providers, assessing the
business impact and making allowances for any anticipated repeat
opt-outs.
Decision-making enablement
Your employees need to be able to make an informed decision.
So give them the right information at the right time. This must be
carried out throughout the process. You’ll also have to manage
any opt-outs and allow them to re-enrol when possible if that’s
something they want to do.
Accommodating the as-yet unknown
AE legislation is subject to change – so you’ll need to keep an eye
out for any updates. For example, AE thresholds are subject to
annual review and the whole of the AE legislation is scheduled to
undergo a review in 2017.
Making correct contributions
Arguably one of the most important parts: contribute the right
amount. You need to contribute in line with the government’s set
increases. Your minimum contribution is 1%, which will rise to 2% in
2018 and 3% in 2019. Together, you and your employees need to
contribute a minimum of 8% by April 2019.
Audit preparation
Don’t do all this hard work now only to have to do it all over again
for audits. So keep all of your records – from assessment documents
to employee communications.
AE has many challenges. The list above is by no means exhaustive,
and your company will have – or may be about to encounter – its
own individual obstacles. However, each challenge gives you the
chance to improve your business as a whole. In the case of AE, you
could meet the new legal requirements and improve efficiency
across HR at the same time.
You need to contribute in line with
the government’s set increases.
You need to contribute in
line with the government’s
set increases. Your minimum
contribution is 1%, which will
rise to 2% in 2018 and 3% in
2019. Together, you and your
employees need to contribute
a minimum of 8% by April 2019.
Employer minimum
contribution
Total minimum
contribution
8%
1%
2%
Your minimum
contribution
3
2%
This will rise
to in 2018
Companies are looking at a whole range of options. Some seek
comprehensive support while others look for help only in specific
areas. So one of the first questions to ask is whether you need
a DIY service or a fully managed approach.
At ADP, we recognise the issues you and the market are facing.
Our latest response is AE Connect. AE Connect gives you a
clear, simple path to comply with your AE obligations.
What does ADP AE Connect mean for your business?
• A route to compliance that is simple, easy, and understandable
• The choice to have a fully-managed solution, or support in
the form of tools to manage AE assessment, enrolment and
communications
• A cost-effective solution that enables you to add value to
your stakeholders and to your bottom line
• Peace of mind regarding the security and integrity
of employee data
DIY or fully
managed?
We tailor AE Connect to you. Whether you require a
fully managed service, or specialist, modular help
– you’ll find the right solution here.
Full AE service
Let us handle the assessment, enrolment and
communications – saving you time and stress. If you don’t
have an auto-enrolment solution in place, or you want to
replace an existing service with one managed for you,
AE Connect is right for you.
AE self-service
Want to manage auto-enrolment for yourself? You’ll have
access to tools that help you manage your obligations,
as part of a self-managed solution.
You can use this solution in conjunction with ADP
payroll services.
Realising new opportunities
Making correct contributions
5%
Your obligations are set in stone. Your challenges are growing.
In order to save time, keep costs down, and remain compliant,
you need a holistic solution.
3%
This will rise
to in 2019
Automatic enrolment: are you ready?
“Want to manage your
AE scheme yourself?”.
Compliance without the stress
Automatic enrolment has multiple requirements, multiple deadlines,
and multiple categories. You need a solution that gives you a
course of action you can configure to suit your own circumstances
– a solution that is simple, scalable and straightforward. A prime
case in point is ADP AE Connect. This solution provides:
A simple, clear path to compliance
• Helps you meet your AE duties both now and in the future
• Guides you through the set-up process. The management
structure for your AE scheme will be set up for you, removing
the need for excess effort
• Supports your independence, if you choose the self-service route
• Ensures you can carry out third-year assessments, re-enrolment,
and communications
The ADP solution
A cost-effective approach, giving you more time to
concentrate on your clients and business demands
• Removes the need for bespoke payroll reports to third
party communication services
• Gives you a single point of contact for all AE queries
and processes
• Automates email communications to employees. Once assessed,
employees receive information instantly. This enables them to
respond quickly regarding opt-out
• Removes the need for additional resource to manage AE
• Frees up time for your HR department: they don’t have to
deal with AE employee communications
• Provides you with a single point of contact for AE queries
and processes
A secure way to handle your employees’ data, giving
you peace of mind
•H
olds employee data in secure data centres
•S
ends copies of all employee communications to an email
inbox in your business, making compliance audits easier
Full AE service
AE self-service
AE has many stages, processes, exceptions and categories to
contend with. So what you need is cut-through. A straightforward
and clear route to full AE implementation. A solution that takes
every issue in its stride.
Not all companies need a fully managed service. You may have
already met the majority of your duties, and have the in-house
resource to continue to do so. A DIY approach is the ideal solution in
this instance.
You need a solution that’s streamlined, efficient and secure. That
way, you don’t just tick regulatory boxes. You conserve resources to
use in other ways and at other times. And you know you’ve done all
you can to protect against threats to data integrity.
You can use AE Connect as a self-service SaaS solution. If you
manage your payroll in-house, using ADP software, you can manage
your AE obligations in the same way. It’s a portal that contains
compliance tools, giving you a simple way to meet your legal duties.
With our full AE Connect service, you supply us with the information
that lets us run the pension processes you set up. Then you can
decide whether to develop your AE solution from scratch, or use
your current set-up. You’ll also be able to use it to handle your
three-yearly re-enrolments.
Stop wasting time. Just upload your employee data, and it’s ready
to be used. The portal has a ready-made structure and simple
set-up process. Your employees will get information and updates
straight away, so they can start making decisions faster. Use the
portal to handle your third-year re-enrolments, and make your life
much easier.
Stop giving your HR department more work. The service is costeffective, and means you can free up people in your business.
Create high levels of efficiency in your payroll process, with AE
Connect. And make sure your employees get information instantly –
letting them make decisions even faster.
AE Connect keeps your employees’ data in secure data centres.
Plus all communications are sent to an internal inbox, making your
audits even easier.
Full AE service
AE self-service
Provides a fully managed service to help you comply with AE.
Provides support if you’re running your own AE scheme.
The full service can:
Self-service can:
• manage the assessment and enrolment of eligible
employees fully
• assess and enrol eligible employees
• provide infrastructure to handle all obligations
• make all employee pension payments
• manage AE employee communications
• handle opt-outs
• re-enrol previous opt-outs during third-year
re-enrolment
Ease, simplicity,
compliance
• give you confidence when submitting your declaration
of compliance
All up to date and in one place for employers – from ADP
5
Automatic enrolment: are you ready?
Save money and save time. It’s cost-effective and time-efficient,
freeing up time in your business. You can focus on what matters,
while AE Connect handles the admin. You don’t need to give AE
tasks to people in your business. And you don’t have to involve
other third parties – you’ll get complete and secure support from us.
• handle your AE obligations
• manage all applicable pension payments
• communicate all AE information to your employees
• handle all opt-outs
• re-enrol previous opt-outs during third-year
re-enrolment
• give you confidence when submitting your declaration
of compliance
Further information
For more information on automatic enrolment, please visit
www.workplacepensions.gov.uk and www.thepensionsregulator.gov.uk
For answers to common questions about automatic enrolment, please visit
http://help.thepensionsregulator.gov.uk/faq/
You can find a 2015 summary report by Department’s Automatic Enrolment
Evaluation Team at:
www.gov.uk/government/uploads/system/uploads/attachment_data/
file/477177/summary-rr909-automatic-enrolment-evaluation-2015.pdf
For more information on ADP’s AE Connect, download the brochure here:
www.adp.co.uk/autoenrolment
Or please contact ADP at:
0800 1707 677
Note
ADP can help employers meet the challenges and realise the
opportunities afforded by auto-enrolment but cannot offer
pension advice. If you need such advice please contact your
registered IFA.
Registered office: Syward Place, Pyrcroft, Chertsey, Surrey KT16 9JT Tel: 0845 230 0237 Fax: 0845 230 2371
The ADP logo and ADP are registered trademarks of ADP, LLC. Copyright © 2016, Automatic Data Processing Limited.