Auto Enrolment Pension Staging Date: A Guide for Employers
Whether you’re exploring the possibility of establishing a new auto enrolment pension for your company, or if you’ve already got one in operation pension auto enrolment staging dates might puzzle you. How do you determine your staging date, and why does it matter?
In this guide, we’ll delve into the significance of the auto enrolment staging date and its implications for your company.
What exactly is the auto enrolment staging date?
The auto enrolment staging date refers to the deadline by which UK companies must launch their auto enrolment pension plans.
Now, you might be wondering, do we still need to be concerned about the auto enrolment staging date? Hasn’t pension auto enrolment been an obligation for quite some time? Indeed, it’s been a statutory requirement for all UK companies since 2017.
The UK Government opted for a phased introduction of this scheme to streamline understanding and provide crucial advice to companies. This assistance highlighted the significance of auto enrolment and the ease with which internal payroll and benefits departments can handle it. Larger employers were prioritised with earlier staging dates, followed by smaller companies.
Every company is legally bound to initiate automatic enrolment for employees who:
• Are aged over 22 but haven’t reached the State pension age
• Have an annual income exceeding £10,000
The choice of scheme and where the pension money is invested rests with both the employer and the employee, as long as they are compliant by the staging date.
Notable exclusions are freelancers, the self-employed, or companies solely with directors without employment contracts. They aren’t obliged to auto enrol and must manage their pension contributions independently.
The Pensions Regulator oversees adherence to the auto enrolment staging date.
Why does auto enrolment for pensions matter?
It’s estimated that auto enrolment has led to the inclusion of 10 million additional employees in pension plans. However, as the workforce grows, companies must consistently educate new hires about pensions and the influence they hold over their financial future. This also entails ensuring timely enrolment based on the staging date.
The primary objective of auto enrolment is to aid employees in planning for their retirement with support from employer pension initiatives. While there is an opt-out choice, every three years employers must re-enrol eligible employees to prove compliance. At this point, employees can again decide if they wish to remain or opt-out.
Auto enrolment aims to guarantee employees a financially stable future through consistent savings. A good workplace pension plan also gives employers a competitive edge in attracting top talent.
Determining your auto enrolment staging date
Your company’s staging date is set based on the employee count on your payroll as of April 1st, 2012. From this date, the Government initiated the staging dates, starting with companies that have 120,000 or more employees on the payroll.
From 2017 onwards, all UK businesses, regardless of size, are obliged to implement auto enrolment pension schemes.
For established companies, auto enrolment should already be in place. But, for start-ups or those recruiting new talent, there are specific deadlines.
Newly hired employees, based on eligibility, must be included in your selected workplace pension plan either immediately upon joining or post their probation. You get a maximum duration of 3 months to enrol all qualified individuals.
Re-enrolment is a process that happens every 3 years, and it should occur within five months from your initial staging date. This is why teams handling pensions must be well-informed of these dates.
During this phase, all employees are re-enrolled, granting them another opportunity to opt-out if they wish.
Conclusion and the path forward
The responsibility of ensuring timely enrolment of qualified employees in the company workplace pension plan before the staging date rests squarely with employers. Given the legal requirements, it’s vital for companies to opt for a hassle-free auto enrolment pension solution.
Consider Penfold’s workplace pension. This award-winning scheme simplifies your company’s pension administration. Penfold has reimagined the entire workplace pension experience with a streamlined solution that helps improve employee retention.
Book a demo of Penfold’s workplace pension today.