Pension Auto-Enrolment

A new law means that every employer must automatically enrol workers into a workplace pension scheme if they:

  • are aged between 22 and state pension age
  • earn more than £192 per week if paid weekly, £833 per month is paid monthly (2014/5)
  • work or ordinarily work in the UK

This is called ‘automatic enrolment’. If an employer doesn’t make a qualifying contribution to a worker’s pension already, they will have to by law when they ‘automatically enrol’ every worker. Not doing so will incur penalties.

Workers who do not meet the above criteria, but are aged 16 to state pension age and earn over £111 per week if paid weekly or £481 per month if paid monthly (2014/5) would need to be invited to join and if they do so, would receive a contribution from their employer.

The first question to ask is when must your business start auto-enrolment and this is called the ‘staging date’. The staging date depends on how many people you had on the largest payroll you used as at 1 April 2012.  The new employer duties are being introduced over 6 years, starting with the UK’s largest companies in 2012. You can check any company’s staging date here:

www.thepensionsregulator.gov.uk/employers/tools/staging-date.aspx

Having considered the staging date we move onto the practicalities of operating auto-enrolment. There is a huge variety in the scale and duration of Film and TV productions. Larger organisations, such as studios and broadcasters will typically engage employees for longer periods of time and could have an established relationship with a pension provider. They may also work with a payroll bureau who will administer their pension obligations. At the opposite end of the scale a Special Purpose Vehicle Company (SPV) for a small film may have none of those relationships in place and therefore require someone to manage the whole process.

Every single employer in the UK is going to have to:

  • Provide information to all staff
  • Automatically enrol eligible staff into a qualifying scheme
  • Make contributions according to the rules of the qualifying pension scheme in use
  • Process opt-outs / make refunds
  • Process opt-ins for non-eligible jobholders
  • Allow entitled workers to join a pension scheme
  • Maintain records for up to 6 years
  • Re-enrol eligible jobholders once every three years
  • Register the pension scheme with the Pensions Regulator

Postponement

The new law allows an employer to operate a 3 month deferral period before an employee becomes auto enrolled. However employees must still be processed at the start date, regardless of the ‘likely’ duration of their employment.  Once the auto-enrolment (deferral) date has been reached the worker must be assessed and, if eligible, must be automatically enrolled in a qualifying pension scheme.

Opt-out

If the individual would like to opt-out they can do so. If they do this within one month from the auto-enrolment date they will then receive a full refund of any deductions. If the request to opt-out is received after one month then the existing deductions remain in the pension scheme and future contributions are stopped.

Opt-in

If a non-eligible worker opts in then they must be added to the pension scheme and minimum contributions must be made by the employee and the employer. However, if an entitled worker asks to join a pension scheme then no employer contribution is required.

Who is likely to be a worker

It is possible for individuals who are taxed as self-employed to be considered a worker if they are required to perform the work personally.   Actors can be considered workers, but the assessment is driven by the specific circumstances.

Record Keeping

Your PAYE Scheme and your pension scheme will be logged with the pension regulator and you could be audited at any time. The records you might be asked to supply may include:

  • Start date (employment)
  • Postponement date (date when auto-enrolment is deferred to)
  • Joining notice (pension scheme, not employment)
  • Date pension documentation was sent/given to employee
  • Opt-in and opt-out notices and the date of receipt
  • Name, NI number and DOB
  • Gross qualifying earnings in each period – this will include overtime, round sum payments and any other earnings as appropriate.
  • Records about the pension scheme that was used

Further information

Detailed records must be kept for up to six years.

The best place for guidance is The Pension Regulator and to find their starting guide follow this link

www.thepensionsregulator.gov.uk/employers/beginners-guide-to-auto-enrolment.aspx