18 August 2016, 15:14

What small charities need to know about auto-enrolment and assessing staff

Small and micro charities are coming up to their auto-enrolment staging dates. This blog provides a quick refresh for those people currently going through the process of getting their charities ready to stage. All charities that have at least one paid worker will have automatic enrolment duties. Charities need to assess their staff, put those who meet certain criteria into a pension scheme (and make contributions to it), tell them what you’ve done, and complete a declaration of compliance. CFG has an auto-enrolment guide for small charities which you can download for free on our website Formal assessment of staff Which earnings qualify for auto-enrolment? What do I need to do once I've assessed my staff? FAQs 

Formal assessment of staff

‘Assessing your staff’ is a key step to take to comply with your automatic enrolment duties. Quite simply it means considering the age and earnings of the people you employ and identifying who needs to be automatically enrolled and who doesn't. Not every member of staff needs to be automatically enrolled. It depends on their age and earnings – those who earn above £192 of qualifying earnings in a week (or £833 in a month) and who are 22 or over (but under state pension age) must be put into a pension scheme. If you employ staff whose hours vary (e.g. zero hours contract), pay fluctuates, are seasonal or are on short-term/temporary contracts the legal duties will still apply to you. If any of your staff fall outside of the above age and earning criteria then you only need to put them into a pension scheme if they ask. The Pensions Regulator has a tool on their website to help with your assessment – www.tpr.gov.uk/ae-checker. NB: If you’ve worked out that you don’t have staff to put into a pension scheme, it’s important to know that you still have other tasks to carry out in order to meet your legal duties – you will still have to write to individual staff members to tell them how automatic enrolment applies to them. The Pensions Regulator has templates on their website that will help you with this.

Which earnings qualify for automatic enrolment?

Qualifying earnings include wages, salary, fluctuating elements of pay, bonuses, and some statutory payments, such as maternity and sick pay. Not all pay elements fit neatly inside these headings, and a good rule of thumb is that if earnings are subject to National Insurance contributions, then they are likely to also qualify as earnings for automatic enrolment. Payroll software should help with this, and also where earnings fluctuate on a week-by-week or month-on-month basis. Many payroll providers already provide a module or an add-on for automatic enrolment that will do this earnings number-crunching for you, as well as calculating the correct contributions, and helping with your ongoing duties. Look at your payroll software to find out how it can help you with automatic enrolment.

What do I need to do once I’ve assessed my staff?

Having worked out what you need to do for each person you employ, the next step is to then put those that you need to into a pension scheme and to write to each person individually. Unless you want to use an existing pension scheme for automatic enrolment, you’ll need to find a scheme yourself or get help from your accountant or a financial adviser. The Pensions Regulator has information that can help you with this – www.tpr.gov.uk/employers Once you’ve chosen which pension scheme you want to use, you’ll need to give your pension scheme provider information including staff name, address, date of birth and earnings, so that they can set up your staff in the pension scheme. Each time you pay your staff you will need to calculate how much you (and they) need to contribute in and arrange for this to happen. Payroll software may help do this for you.

FAQs

My pensions provider will not offer me a qualifying scheme because I am too small an employer – which pension schemes are open to small employers? The Pension Rgulator has a list of schemes that have said that they are willing to take on small employers. They can be found here: 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 One of my staff has a second job with a different employer; do I have to take this into account when assessing them? You only need to consider staff who are employed by you. Their earnings from another employer do not form part of your assessment. If a member of staff’s earnings are less than or equal to £192 a week, must they be put into a pension scheme? If your member of staff’s earnings are less than or equal to £192 a week (£833 a month) you do not have to put them into a pension scheme that you pay into, unless they ask to join the scheme. However, you will still have other duties which include writing to all staff individually and completing your declaration of compliance. Use The Pensions Regulator’s Duties Checker to understand the specific duties you have. I'm the only person employed by my charity - do automatic enrolment duties apply to me? If you are the sole employee and you have no other paid staff or only has volunteers then you may still have automatic enrolment duties and should go through the formal assessment process. I have a letter from the TPR but I do not have automatic enrolment duties – what do I do? You will need to tell TPR that you’re not an employer. Failure to alert them to your circumstances may trigger compliance action – go to www.tpr.gov.uk/ae-checker no

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