By Charles Counsell, executive director, automatic enrolment, at The Pensions Regulator

The law has changed because people are living longer and not saving enough for their retirement. That's why employers must now put certain staff into a pension and make regular contributions into it.

So far nearly 260,000 employers have automatically enrolled more than 6.6 million staff, many of whom are now saving for their retirement for the first time. Eventually around 10 million staff will be saving into a workplace pension.

Automatic enrolment is being rolled out in stages. It started in 2012 with large and medium sized employers and now thousands of small employers are seeing their duties start.

Most employers want to do the right thing and think that automatic enrolment is good for their staff and The Pensions Regulator is here to help employers meet their duties.

What will you need to do to implement automatic enrolment?

  • Identify which staff you will need to automatically enroll into a pension scheme. These will be over 22, earn more than £10,000 per year and who live in the UK. These are called eligible staff.
  • Write to all your staff including those who are not eligible and tell them how automatic enrolment applies to them.
  • Choose a workplace pension scheme and put eligible staff and those who want to join, into it.
  • Once you have done your duty, you need to tell us by completing the on-line declaration of compliance.

When will you need to act?

You should act now and head to our Duties Checker http://www.thepensionsregulator.gov.uk/en/employers/duties-checker

This is an online tool which will tell you the date your duties start - this is called your staging date. The staging date is a date set in law that is specific to you.

The Duties Checker takes just five minutes to complete and will tell you what you need to do and when. You'll be directed to information that's suitable for your situation.

Once you know when your duties start, take a little time to understand your duties. This will save you time in the long run and the earlier you start planning, the easier automatic enrolment will be.

How can The Pensions Regulator help you?

The role of The Pensions Regulator (TPR) is to maximise employer compliance with their workplace pension duties. We work to ensure that businesses have the information and tools they need to comply with the law.

We have a wealth of information and tools to help you every step of the way and they have been designed for employers who may not have pensions experience.

In addition to our Duties Checker, you may want to take a look at our animated guide for an easy to understand explanation of how automatic enrolment works http://www.thepensionsregulator.gov.uk/docs/the-essential-guide-for-automatic-enrolment.pdf

As you will need to write to your staff, TPR has template letters to suit different circumstances - whether your staff are eligible to be put into a pension scheme, or can opt in or join one. Some business advisers and pension providers can also send these on your behalf.

If you have staff to put into a pension, you will need to choose a pension scheme suitable for automatic enrolment. TPR has easy to understand information on this including a list of well run schemes which are open to all sizes of businesses. http://www.thepensionsregulator.gov.uk/en/employers/duties-checker/outcomes/i-am-an-employer-who-has-to-provide-a-pension/choose-a-pension-scheme-or-check-your-existing-one.aspx 

You'll also need to ensure your payroll software is compatible with your chosen pension scheme. TPR has information about what to look for when choosing payroll software. http://www.thepensionsregulator.gov.uk/en/employers/duties-checker/outco...

Most commercially available software that you or your payroll bureau is likely to be using will be compatible.

TPR tools and information make it as easy as possible to implement automatic enrolment by yourself. You may however want to ask a business adviser such as an accountant or bookkeeper to help with some or all of your tasks. If you do use a business adviser, you should be clear what services they are providing so that tasks don't get missed.

You can nominate a business adviser as an additional contact when you complete the Duties Checker. They'll then receive tailored information from us. You must make sure we have the right contact details.

The final part of the set-up process is to complete what is called your "declaration of compliance". This is an online form that tells us, TPR, that you have completed the process and are compliant with your automatic enrolment duties. You can start this process whenever you like and you can find the form on our website
www.autoenrol.tpr.gov.uk. The form cannot however be completed until after your staging date and you have automatically enrolled your eligible staff. The deadline for its completion is five months after your staging date.

How long does automatic enrolment take and how much does it cost?

The time and cost of automatic enrolment will vary from employer to employer, TPR research of micro employers - with between one and four staff - showed that 60% of them had no set up costs. Those that used a business adviser paid around £400.

Set up costs will depend on various things, including whether and how you use a business adviser, how you run your payroll and which pension scheme you choose. Costs will also vary if you have more staff as some providers or business advisers may charge based on the number of staff. Costs may also vary depending on where your business is based.

There is a risk of paying more if you leave your plans to the last minute, so allow plenty of time to shop around for providers and services so that you find a scheme that is right for your business and your staff.

The micro employers we spoke to earlier this year spent around 10 hours overall, over a 12 month period before their staging date, carrying out their automatic enrolment tasks. More information on understanding your costs can be found at:

http://www.thepensionsregulator.gov.uk/en/employers/duties-checker/outco...

What to do if you are a new business

The date your automatic enrolment duties come into effect will depend upon when you set your business up and when you first employ someone.

New businesses may of course not employ anyone although they may intend to take on staff in the future. HMRC shares information with TPR so that we are made aware when a business registers for PAYE and takes on staff.

Once you have a PAYE reference, you can use our Duties Checker to find out when your duties will begin.

What to do if you are setting up a new business

To meet their duties, existing employers need to carry out a number of tasks which will be in addition to their usual day to day running of their business. The advantage for new employers setting up a business is that when creating a business plan, budgeting and getting systems in place, for example payroll software, automatic enrolment responsibilities can be factored in from the start.

In the same way as complying with health and safety legislation, registering with HMRC and paying national insurance, automatic enrolment is just part of what you should do when you set up a new business in the UK.

Your staff will be saving for their retirement and you will be helping them to have a reasonable standard of living when they reach their retirement.

What if I don't comply?

Employers who are struggling should contact TPR. We will work with employers to help get them back on track as non-compliance could lead to a financial penalty, including a £400 fixed penalty and an escalating penalty.

There is no financial benefit in not completing automatic enrolment. Employers who are fined for non-compliance will still need to pay the penalty, even if they then go on to meet their duties. They will also need to backdate employer contributions to staff who have lost out and may also need to pay any outstanding staff contributions back into the scheme so that their staff do not lose out.

Most small businesses have simply got on with what they need to do, though others have left things to the last minute. While the vast majority comply with their duties on time, a small number need the extra nudge of a compliance notice or fixed penalty.

Starting planning in good time is the best way to ensure you comply with your duties on time.

Meeting your automatic enrolment duties means your staff will be saving for their retirement and you will be contributing to changes to the pension landscape, where saving for retirement becomes the norm and people will be able to look forward to a dignified standard of living.