Broadstone terminology

Staging date

If a company is setting up a business now, then auto enrolment duties simply begin on the first day the employees start work. This is known as your Duties Start Date.

Auto enrolment staging dates were set by The Pensions Regulator, using PAYE scheme sizes as a way of defining who needed to be enrolled and when.

What are your pension duties?

The easiest way to understand new duties is to use The Pension Regulator’s tool. On the Duties Start Date (the first day as an employer), the employer must assess all of its employees. To use the tool, we can open it in a new window for you. This will let you come back to this page easily, to learn more about choosing a pension provider.

Visit the Pensions Regulator

Choosing a pension provider

As The Pensions Regulator explains, if a company needs to set up a pension scheme to handle auto enrolment then it has to choose a pension provider.

For new employers, small companies in particular, this can be daunting – but we make it easy to set up and run a scheme, even if the company is only employing a small number of people people.

What happens if a company misses its Duties Start Date?

If a company misses its Duties Start Date, then it may need to backdate contributions for employees that should have been auto enrolled already.

If less than six weeks have passed

Depending on which pension provider is chosen, it can take a few weeks to set up a scheme. By comparison, we believe our system is quick and easy to get set up – often in just a few hours.

As soon as an employer starts their pension scheme they need to enrol the employees who meet the auto enrolment criteria. If less than six weeks have passed since the Duties Start Date, then the employer will have to backdate those employees’ scheme membership to the day they first met the age and earnings criteria. The employer may also need to backdate contributions.

The alternative is to use ‘postponement’, which enables assessment to be postponed for up to three months. When an employer chooses postponement, it doesn’t need to backdate contributions. The employer can then postpone auto enrolment (the process, not its responsibilities) from:

  • An employee’s first day of employment
  • The day on which the Duties Start Date became effective
  • The date an employee first becomes eligible for auto enrolment

An employer can only choose postponement if the company is within six weeks of the date it became eligible to auto enrol employees.

If more than six weeks have passed

If more than six weeks have passed since the Duties Start Date, then the employer will have to pay any contributions that should have been made back to the date employees met the age and earnings criteria for the scheme.

As you can see, it’s important to choose a pension provider that can help clients to get set up quickly.

Re-enrolment

Once every three years, employers must re-enrol any eligible staff who were employed when the pension scheme was set up but – for whatever reason – aren’t actively paying in three years later.
Your first date is 3 years after you first staged (had to enrol employees).

The employer can decide when this happens (although they can’t postpone re-enrolment). Most companies choose the beginning of a month or a date that aligns with their regular payroll cycle.

The day itself must occur within a six-month window that starts three months before the third anniversary of when automatic enrolment duties started and ends three months after it.

For example, if a pension scheme opened on 1st July 2019, then the third anniversary of that staging date would be 1st July 2022. The three-month window would run from 1st April 2022 to 30th September 2022, during which time all qualifying employees would need to be re-enrolled.

Certification

The certificate has to be renewed every 18 months and the purpose of the certification is to certify that all employees covered by the certificate, satisfy the minimum contribution requirements. The minimum contribution requirements would vary dependent on the pensionable pay definition being used.

As an example a certificate needs to contain the following:

A unique identifier such as:

  • Pension Schemes Registry Number(s) (PSR)
  • National Employment Savings Trust reference number
  • a reference number given the provider of a personal pension scheme, or
  • the reference given to a multi-employer scheme

Name of scheme:

Are you certifying a section/part of a scheme: Yes/No
If “yes”, give details:

Name and Address of employer(s):

Effective Date of certificate:

Certification period:

If the certification period is changed at any time, give below the new date of expiry and brief reasons for the change:

The certificate relates to either:

  • An occupational money purchase scheme (The scheme we will set up for you).
  • The money purchase element of a hybrid pension scheme.
  • A personal pension scheme.

Does the certificate cover all jobholders who are active members: Yes/No
If “no” attach names and roles of the relevant jobholders covered by certificate.

Have you excluded any jobholders who are receiving contributions of at least the minimum required by law? Yes/No
If “yes”, attach names and roles.

Have you excluded any jobholders because they have chosen to pay contributions below the qualifying level? Yes/No
If “yes” attach names and roles.

Does the scheme operate a contribution or earnings cap? Yes/No.
If “yes”, please give details.

Relevant quality requirement – minimum pension contributions:

The scheme to which this certificate relates satisfies the following set of the alternative quality requirement for all relevant jobholders.

Set 1

Steady state – from 6 April 20199% of pensionable pay and pensionable pay is at least equal to basic pay (inclusive of at least a 4% employer contribution)

 

Set 2

Steady state – from 6 April 20198% of pensionable pay and pensionable pay is at least equal to basic pay (inclusive of at least a 3% employer contribution)
And:Pensionable earnings constitutes at least 85% of total earnings for all relevant jobholders taken together.

Set 3

Steady state – from 6 April 20197% of pensionable pay and pensionable pay is equal to total earnings (inclusive of at least a 3% employer contribution)

 

You must confirm the relevant jobholders and the names and roles of any jobholders who have been excluded from the certificate.

NB: For certain hybrid schemes you will need to modify the minimum contributions to reflect apportionment of benefits within the scheme.

Satisfaction of the relevant or alternative requirement:

I certify that, in my opinion, the above scheme is able to satisfy the relevant quality requirement in sections 20, 24 or 26 the Pensions Act 2008 or one of the alternative quality requirements set out in section 28 of the Act and Part 7A of the Occupational and Personal Pension Schemes (Automatic Enrolment) Regulations 2010 throughout the certification period in relation to the relevant jobholders.

In giving this certificate, I confirm that I have complied with the requirements contained in the relevant legislation and have had regard to the current Guidance on Certification issued by [the Secretary of State for Work and Pensions] [the Department for Social Development] under section 28(6)(d).

Signature of employer/person authorised by employer:
Name:
Position:
Date:

Contribution

As the Employer you have the choice as to how much you contribute to your company scheme and also how much you ask your employees to contribute within legal limits as defined below:

Steady state – from 6 April 20198% of qualifying earnings (inclusive of at least a 3% employer contribution)

The above is the cheapest option for Employers, but not the easiest to understand, or administer due to the definition of QUALIFYING EARNINGS and therefore many Employers select from the following minimum options:

 

Relevant quality requirement – minimum pension contributions:

The scheme to which this certificate relates satisfies the following set of the alternative quality requirement for all relevant jobholders.

Set 1

Steady state – from 6 April 20199% of pensionable pay and pensionable pay is at least equal to basic pay (inclusive of at least a 4% employer contribution)

Set 2

Steady state – from 6 April 20198% of pensionable pay and pensionable pay is at least equal to basic pay (inclusive of at least a 3% employer contribution)
And:Pensionable earnings constitutes at least 85% of total earnings for all relevant jobholders taken together.

Set 3

Steady state – from 6 April 20197% of pensionable pay and pensionable pay is equal to total earnings (inclusive of at least a 3% employer contribution)

Qualifying earnings

Qualifying earnings is the definition used as the lowest level of pension contribution that can be compliant with Automatic Enrolment legislation and means that contributions are calculated and paid on the salary between the lower level and upper level, i.e. £6,240pa and £50,000pa in tax year 20/21. This means salary below £6,240pa or above £50,000 is effectively not pensionable and therefore the maximum pensionable pay in tax year 20/21 under this method is £42,670pa .

 

Every year, the Department for Work and Pensions (DWP) reviews the earnings thresholds for automatic enrolment. The changes take effect from the start of the next tax year following the changes on 6 April.

Here you can find the earnings thresholds for the current tax year, broken down by pay frequency.

Earnings thresholds for the current tax year 2020-2021

Pay reference period
2020/21Annual1 weekFortnight4 weeks 1 month1 quarter Bi-annual
Lower level of qualifying earnings£6,240£120£240£480£520£1,560£3,120
Earnings trigger for automatic enrolment£10,000£192£384£768£833£2,499£4,998
Upper level of qualifying earnings£50,000£962£1,924£3,847£4,167£12,500£25,000

Salary sacrifice

A salary sacrifice (or as we prefer to call it Salary Exchange) arrangement is an agreement to reduce an employee’s entitlement to cash pay, usually in return for a non-cash benefit.

As an employer, you can set up a salary sacrifice arrangement by changing the terms of your employee’s employment contract. Your employee needs to agree to this change and certain payroll process need to be put in place. See here if want further information