Auto enrolment overview

Under the Pensions Act 2008, every employer in the UK must enrol certain employees into a pension scheme and contribute towards it. This is called automatic enrolment (AE). If your organisation employs at least one person, you are an employer with certain legal duties. The Pensions Regulator (TPR) follows up any organisation that does not complete a declaration of AE compliance, and there are substantial fines for non-compliance.

Employees are eligible for enrolment into a workplace pension scheme if they are:

  • Aged between 22 and state pension age

  • Not already in a pension scheme

  • Earning at least £10,000 per year

  • Ordinarily working in the UK

If employees do not want to be part of a workplace pension scheme they can opt out, and non- eligible employees can opt in. Opted out employees are eligible for re-enrolment after about three years.

Organisations must:

  • Monitor employees continually for AE entitlement (for example, if their earnings increase, or when they reach 22)

  • Keep employees informed

  • Pay minimum pension contributions in line with payroll legislation

Organisations can postpone enrolment for up to three months (for example, when employees are on probation, or during breaks in their eligibility), but they must inform employees if they do so.

Initially there were staging dates for AE compliance, but from 1 February 2018, all eligible employees should be enrolled in a pension scheme.

Employee definitions for automatic enrolment

Different employees have different AE rights, and are categorised for AE based on their age and earnings.

Qualifying earnings include everything except expenses (for example, salary, bonuses, commission, maternity pay). Pensions contributions can be based on qualifying earnings, or calculated in other ways (for example, pensionable earnings).

The government reviews the earnings trigger and qualifying earnings thresholds for AE every year, so make sure you are using the latest figures when you assess your employees. For 2018/19, the earnings trigger is £10,000 and qualifying earnings are from £6,032 (i.e. lower threshold) to £46,350.

About Auto Enrolment in IRIS Cascade

The IRIS Cascade Auto Enrolment module helps you to manage AE for your employees. You can use the module to:

  • Monitor and assess employees’ AE eligibility

  • Manage communication with employees (using letter templates that cover all legal requirements) and enable them to use self-service to monitor their own AE.

  • Configure and deduct pension contributions if your organisation uses IRIS Cascade Payroll

  • Use AE timelines to create a date-based audit trail of opt-ins, opt-outs and communications

The Auto Enrolment module keeps all your AE information in one place. The colour-coded graphics on the At a Glance screen show which employees you need to assess, enrol or communicate with, and you are then guided through what you need to do.

Automatic enrolment tasks in payroll processing

AE tasks should form part of your standard payroll processing in IRIS Cascade. The process can very between organisations, but the image below shows an example of a typical standard process.

The tasks that you will need to carry out at the AE stage of your payroll processing, as shown below.