Workers Pension Trust Goes from Strength to Strength

As we herald the start of the new year we are delighted to report that the growth in membership of Workers Pension Trust has continued apace. We now provide a workplace pension for 4,200 employers and 47,000 employees.

Contribution Increases

The date for the first increase in minimum contributions for both employers and employees is now imminent.

From 6 April 2018 the minimum levels change to 2% Employer and 3% Employee and this will be further increased to 3% Employer and 5% Employee from 6 April 2019.

The changes affect every business in the UK and will happen for everyone on the same dates. It is important that payroll systems are updated on time to ensure that the correct contributions are deducted at the correct time.

We also recommend that employers write to staff to ensure that they are aware of the increase. Communicating with workers early will help to minimise queries.  Click here to view the template Contribution Increase Reminder letter.

Pension Schemes have a legal obligation to inform the Pensions Regulator where an underpayment is detected.

Auto-enrolment for New Businesses

Darren Ryder, Director of Auto-enrolment with the Pensions Regulator stated recently that when new businesses are set up they should be aware that “Auto-enrolment is the law and not an option”. It should be handled in the same way as registering with HMRC, as an automatic function for every new business.

As soon as a new employer’s first member of staff begins, they should be ready to comply with their legal duties.

Within five months of taking on staff, new businesses must complete a declaration of compliance to inform the Pensions Regulator what they have done to comply with their duties.

What happens if an employer misses their duties start date?

If an employer has missed their duties start date, they still need to work out what their auto-enrolment duties are and comply with them immediately. They may also need to backdate contributions for members of staff that need to be put into a workplace pension.

If the employer is less than six weeks after their duties start date, they must backdate their employees’ scheme membership to the day they first met the age and earnings criteria to be enrolled into a scheme, and may need to backdate contributions as well.

Alternatively, they can use postponement to delay the assessment of their workforce for a maximum period of three months from their duties start date. If more than six weeks have passed since their duties start date, they will have to carry out the same process, but they will not be able to use postponement.

Further guidance can be found on the Pensions Regulator website

Pensions Regulator Spot Checks Continue

The Pensions Regulator has continued with its programme of spot checks at over 200 businesses across the South East of England. The inspections make sure that employers are complying with their duties, allowing the Regulator to provide help where it is needed – but they also highlight where enforcement action needs to be taken.

The on-going programme will continue and at some stage will reach Northern Ireland – employers need to be aware.

Future Changes

The Department for Work and Pensions (DWP) published its auto-enrolment review on 18 December 2017.

To make saving the norm for young people, the age threshold for automatic enrolment will be lowered from 22 to 18, enabling more people to save.

The review also highlighted plans to change the automatic-enrolment framework so that pension contributions are calculated from the first pound earned rather than the current lower earnings limit of £5,876 (2017-2018).

These changes are scheduled to take effect from the mid-2020s, subject to discussions with stakeholders during 2018 and 2019.

In addition, the review confirmed that the earnings trigger for auto-enrolment will remain at £10,000 a year for 2018-2019, subject to annual review.