Qualifying workplace pension scheme (QWPS)
The law on workplace pensions has changed. Every employer with at least one member of staff, regardless of the amount they are paid, now has new duties, including enrolling those who are eligible into a qualifying workplace pension scheme and contributing towards it. This is called automatic enrolment.
It is called automatic enrolment because it is automatic for your staff – they don't have to do anything to be enrolled into your pension scheme, but it is not automatic for you. You need to take steps to make sure your eligible staff are enrolled into a qualifying pension scheme.
Staff who are eligible for automatic enrolment are those who are:
- aged between 22 and state pension age,
- are working or ordinarily work in the UK under their contract, and
- have qualifying earnings payable by the employer in the relevant pay reference period that are above the earnings trigger for automatic enrolment.
Employees outside these parameters simply need to receive a communication about their rights to join the scheme.
The earnings trigger for the 2018-19 tax year is £192 per week, or £833 per month.
Please note however that directors do not need to be automatically enrolled if there are no other staff who hold a contract of employment.
Your first step towards automatically enrolling your staff is to find out when your automatic enrolment duties come into effect for you. This is known as your staging date. You can check your staging date on The Pensions Regulator website here.
You must write to all staff and enrol all eligible employees into a qualifying pension scheme within 6 weeks of your staging date.
You must also submit a statement of compliance to The Pensions Regulator within 5 months of your staging date.
How we can help
The following tasks in particular will take employers or their payroll agent some time:
- Setting up a pension scheme and writing to staff.
- Enrolling your staff into a pension scheme and calculating contributions. Contributions to the scheme come from three places. You will make deductions from their pay, you will make employer contributions and the government will contribute via tax relief. You'll need to make sure you contribute correctly.
- You'll also need to let The Pensions Regulator know how you've met your automatic enrolment duties by completing a declaration of compliance.
Automatic enrolment is your legal duty and if you don't act you could be severely fined. A fixed fine of £400 is payable if you fail to meet your obligations by the deadline, plus a daily fine of between £50 and £10,000 (depending on the number of employees) for each day you continue to fail to act.
We can help take the hassle out of automatic enrolment by assisting you complete your duties alongside your general payroll processing.
Further information about automatic enrolment can be found on The Pensions Regulator website:
This information is not meant as a substitute for professional advice and by no means covers every scenario. Almost every rule described here will be subject to many exceptions and caveats. Tax legislation is extremely complex and can be difficult to understand. You should discuss your circumstances with a qualified professional before acting on any information contained within this website. Tax legislation is constantly changing and the information contained within this website is written from our current understanding and interpretation of the tax system as of 6 April 2018.
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