Auto enrolment pensions taken up by 8.1m workers

More than eight million employees have signed up for a workplace pension since the launch of automatic enrolment, new figures published by The Pensions Regulator show, while around 500,000 businesses have a final deadline of 2018 to complete their legal duties depending on when the company was set up 

The introduction of automatic enrolment was expected to lead to around eight million workers saving more for their retirement so this number has already been exceeded with 642,000 employers offering these pensions.

At the end of June, 8,165,000 workers were contributing to a workplace pension as a direct result of automatic enrolment. During June 2017, 168,000 people signed up to workplace pensions. The latest declaration of compliance report shows that the original target of eight million, estimated by the Department for Work and Pensions (DWP) before the launch has already been reached – with hundreds of thousands more employers still to enrol staff over the coming months.

Employers continue to have ongoing duties after they have declared their compliance with the automatic enrolment rules. Recent research by The Pensions Regulator shows that most employers find meeting their ongoing duties easier than they had expected. Most micro employers said they spent only half an hour a month completing their duties.

Darren Ryder, The Pensions Regulator director of automatic enrolment, said: ‘There are more than 500,000 more employers whose duties are still to begin over the coming months. I would urge each and every one of them to check what they need to do and when they need to do it so they can seek our help if they need it.

All employers have legal duties and can use the duties checker to understand exactly what they must do.

A Department for Work and Pensions (DWP) report published in April 2013 estimated that eight million people would sign up for auto enrolment pensions, a target which has already been achieved with smaller businesses and recently set up businesses still entering the scheme. 

The first workers were automatically enrolled into pension schemes in 2012, starting with the largest employers. The policy was introduced to address under-saving with millions of workers not putting aside enough for retirement, and only one in three private sector workers paying into a workplace pension.

What you need to know

Under the Pensions Act 2008, every employer in the UK must put certain staff into an auto enrolment pension scheme and contribute towards it. The scheme covers all employers, from the smallest with only one member of staff.

The smallest businesses are currently facing staging deadlines to set up auto enrolment for all employees. Staging dates are defined by PAYE codes.

In addition, ongoing schemes run by employers have to be re-enrolled every three years. Even companies without any staff have to re-enrol by completing a re-declaration of compliance.

From 1 October 2017, the legal duties as an employer begin on the day the first member of staff starts work. This will replace the staging system based on PAYE numbers.

For those who employ a member of staff between 2 April and 30 September 2017, the date automatic enrolment duties start will depend on whether the employer set up a PAYE scheme with HMRC before or after the member of staff started work.

If the PAYE scheme was set up before staff started working, the employer’s legal duties will start on one of two dates:

  • 1 January 2018, for members of staff first paid between 2 April 2017 and 30 June 2017; or
  • 1 February 2018, if member of staff first paid between 1 July 2017 and 30 September 2017.

If the PAYE scheme was set up after the staff member started working for the company, the following compliance with legal duties applies:

Employers’ legal duties start on date the first member of staff started working for the company. However, for simplicity, The Pensions Regulator will treat the duties as starting on:

  • 1 January 2018, if member of staff first paid between 2 April 2017 and 30 June 2017; or
  • 1 February 2018, if member of staff first paid between 1 July 2017 and 30 September 2017.

It may be possible to start immediate auto enrolment contributions but this needs to be agreed with The Pensions Regulator in advance https://automation.thepensionsregulator.gov.uk/ContactUs

When to sign up for auto enrolment

Employer size (by PAYE scheme size)

Automatic enrolment duty date

 

 

From

To

  

New employers Apr 2013 to Mar 2014

1 July 2017

- - -

New employers Apr 2014 to Mar 2015

1 August 2017

- - -

New employers Apr 2015 to Dec 2015

1 October 2017

- - -

New employers Jan 2016 to Sep 2016

1 November 2017

- - -

New employers Oct 2016 to Jun 2017

1 January 2018

- - -

New employers Jul 2017 to Sep 2017

1 February 2018

- - -

New employers Oct 2017

Immediate duty

- - -

     

The Pensions Regulator Duties Checker for employers is available here

Report by Sara White

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