Navigating the pensions auto-enrolment maze

Posted by Denplan on 20/01/2016
Pensions auto enrolement

Denplan, as part of their professional support services, has been working in partnership with Aon Employee Benefits to help Denplan member dental practices prepare for pension’s auto-enrolment.  Denplan and Aon have recently hosted a number of live webinars, for dentists and practice managers to explain the auto enrolment process and to help them with planning and implementation of the new pension rules, in advance of their Staging Date.  Denplan explains some of the key points from these webinars and some of the key considerations for dental practices on the auto enrolment process…

Auto-enrolment is not optional – all NHS, mixed and private practices need to prepare for this.Even if employees opt out later - you must initially enrol them (and also re-enrol them in future).

Henry Clover, Deputy Chief Dental Officer at Denplan says: “Although many dental practices won’t have reached their auto-enrolment staging date yet (the date at which an employer’s auto-enrolment responsibilities come into effect), it is important that practices are aware of the new regulations and start to prepare for the changes early. Firstly, everyone should double check their Staging Date by visiting www.tpr.gov.uk/staging-date, where they will need to enter their PAYE number. 

“We’re advising practices that they should start preparing for auto enrolment, at least six months before their staging date. It’s definitely worth practices taking a closer look now at what needs to be done to avoid running the risk of fines for non-compliance.” 

Key points to consider

Who do you have to enrol?

Currently, any UK worker aged between 22 and the state pension age who earns more than £833 per month (£10,000 per annum) will have to be automatically enrolled. The definition of ‘worker’ is very important and needs to be considered carefully.  In many cases, this definition could extend to contractors, practice partners, temporary staff and those working zero hours contracts. Even individuals you believe to be self-employed (hygienists and therapists, for example) might actually fall under your duties as an employer.

Where an individual doesn’t meet the criteria for auto-enrolment, they may still need to be offered the chance to join the pension scheme and, as an employer, you may still be required to contribute at a predetermined minimum level.  If in any doubt, it’s recommended you read the Pensions Regulator’s guidance (available on their website) on who is considered to fall under your duties and take legal advice if necessary.

What are you required to pay?

You will have to make regular payments into the pension schemes of all practice team members that you automatically enrol. The law has set a minimum level for employer contributions.  The table below shows the minimum percentages of an employee’s salary that need to be put into the pension scheme by the employer and employee.  The minimum contribution levels will increase gradually up to April 2019. Tax relief will be in addition. The levels below reflect the statutory minimum contributions; in some cases the design of the pension scheme may mean contribution levels will be higher.

Minimum contribution levels

   Until April 2018
 Until April 2019
 From April 2019
Employee
 1% 3% 5%
Employer
1%  2% 3%

Postponement

If you don’t want to start making contributions immediately, you have the option to postpone. This will defer the automatic enrolment of relevant employees by up to a maximum of three months. However, during this time you will still need to communicate to your staff what’s happening and advise them that you have opted to use postponement.  You will also need to inform employees about their right to opt in during the period of postponement, which means you still need to have your pension scheme in place and ready to accept members from your Staging Date.

Opting out

If your team members don’t want to join the pension scheme, they are entitled to ‘opt out’.  The responsibility for doing this falls on the member of staff themselves, after they have been enrolled.  There are laws in place aimed at preventing employers from ‘inducing’ their employees to leave the pension scheme and as an employer you will also need to let employees know that in the future they may be automatically enrolled back in to the pension scheme, usually every three years. 


Making plans

• Firstly, decide who within your practice will take responsibility for the auto-enrolment duties, for example the practice manager or the principal owner.

• If you don’t already have a pension plan in place, you’ll need to source a suitable provider. Even if individual team members have arrangements in place and you are already paying into these, it’s important to check that they meet the qualifying criteria for auto-enrolment as some don’t and you may need to set up a new scheme

• It is vital that you speak with your payroll provider/bureau to determine whether they have the facility to assess your workers each pay period and produce a corresponding report (most do, although some may make a small charge) that will need to be uploaded to the pension provider, usually by the individual who is responsible for your payroll. Therefore, it’s vital that you keep accurate data as you will need to supply this for each pay period

• You’ll need to inform your team members and encourage participation in the pension scheme as part of your employer duties

• You’re required to keep specific records of your automatic enrolment activities so you’ll need to ensure you have an ongoing source for this information

• Don’t forget to complete your declaration of compliance and submit this to The Pensions Regulator online after you have automatically enrolled your members of staff and before the five month deadline.  This must be completed as this confirms you have fulfilled your legal duties and avoids automatic fines

What happens if you fail to auto-enrol an eligible worker?

If you fail to comply with auto-enrolment, the Pensions Regulator can take enforcement action and issue a notice or a penalty.  In the last few months, compliance notices issued by the Pensions Regulator have risen by 25%, with more than 580 fixed penalties (to the sum of £400) having already been applied. The Regulator has also enforced a number of escalating penalties which apply to employers at a daily rate for more serious breaches and continuous failings (after you’ve received notifications of these). The daily rate varies according to the number of employees in the company and, for example, is set at £500 per day for employers with between 5 and 49 workers. We are aware that Aon has already been supporting dental practices who have approached them having accidentally fallen foul of the Regulator despite their best intentions to put a suitable pension scheme in place.


Denplan has partnered with AON to offer its member dentists a discounted and simple to use pension auto-enrolment solution for their dental practices called ‘Littleblue 2go’.  

Aon are an experienced adviser in the auto-enrolment space and they have assisted hundreds of large and small businesses to comply with the regulations around auto-enrolment. Littleblue 2go was created by Aon specifically with smaller employers in mind to ensure that the right support, pension provider opportunities and key information is readily available to employers in the most cost and time efficient way.

Find out more about this offer on Denplan Advantage »

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