Stakeholder Pension

INTRODUCTION

All employers must provide a workplace pension scheme. This is called ‘automatic enrolment’.  Further guidance can be found on the Pensions Regulator website:

http://www.thepensionsregulator.gov.uk

Individual Pension schemes such as Nest or Now also have useful guidance on their sites.

Failure to enrol eligible employees in a pension scheme could result in a fine.

An employer should assess all employees to see if they need to enrol them and make contributions.  They must enrol employees into a scheme if the following apply:

  • Classed as Worker
  • Aged 22 to State Pension age
  • Earn at least £10,000 per year
  • Usual place of work is UK

Employers can postpone the date they enrol workers, usually by up to 3 months, but workers have the right to opt in from their first month/week of employment.  If an employer wishes to use postponement they must notify the employee in writing at the start of their employment.

Some people are out of scope for auto-enrolment such as directors or limited companies.  However, it is advisable to assess everyone to ensure obligations are met in all cases.

If an out of scope individual wishes to opt in they have the right to and cannot be refused.

Employees earning less than certain thresholds don’t have to be auto-enrolled, see The Pensions Regulator website for up to date thresholds

The Pensions Regulator – Thresholds

EMPLOYER DUTIES

Each employer needs to decide which pension scheme they will use for Auto-Enrolment.  There are advisors available to assist with this decision.

After deciding which scheme to use, staff should be assessed to see if they need to be enrolled as per the thresholds detailed on The Pensions Regulator website:

The Pensions Regulator – Thresholds

The pension provider will then need all the information of each eligible employee to set them up in the scheme.

Once an employer enrolls someone into a pension scheme they must write to the employee to notify them of their enrolment date, details of the pension scheme, contributions, how to leave and tax relief application.

There are useful templates on the The Pensions Regulator website.  Including for Postponement.

Employers also need to complete a Declaration of Compliance for the Pensions Regulator to show how they have complied with their obligations.  This must be within 5 months of duties start date.

Note that The Pensions Regulator can impose fines if pension contributions are not correctly paid over to a recognised pension scheme.

START DATE AND POSTPONEMENT

An employer’s Duties Start Date is the date their first worker begins to be employed.

Employers can postpone assessing staff for up to 3 months from their Duties Start Date or from the employee’s start date if they are a new employee.

Postponement does not change the legal duties start date however.

The employer must still perform their duties such as notifying workers within 6 weeks of the duties start date that they have been postponed.

For eligible workers starting after the duties start date they can be postponed from their employment start date.  They must still be notified within 6 weeks of starting.

Workers are eligible to Opt In to the scheme during the postponement period.

Duties Timetable

The below shows a chronology of an employer’s duties:

Duty Deadline Notes
Choose a Pension Scheme Before Duties Start Date o   Find a suitable scheme: be sure to consider costs, compatibility with payroll system, tax implications for employees.

 

o   Most productions use specialist schemes run by large providers.

o   Ensure the provider has been independently reviewed or regulated by the FCA.

o   Look into the different schemes available before making final decision.

Assess Staff Duties Start Date o   Assess workers to determine who needs to be put into a scheme.

 

o   At this point you can postpone for up to 3 months.

Write to Staff Within 6 weeks of Duties Start Date/Employee’s Start Date o   Within 6 weeks of the Duties Start Date you must write to staff to explain how auto-enrolment applies to them.

 

o   If postponement applies you must also write to them within 6 weeks of the start date to explain about postponement.

Complete Declaration of Compliance Within 5 months of Duties Start Date o   Employer’s have a legal duty to complete the Declaration of Compliance to show how they are meeting their auto-enrolment duties.

 

o   It can only be completed once the employer has both a letter code from the Pensions Regulator and a PAYE reference.

o   If it isn’t completed within 5 months of the Duties Start Date the employer could be fined.

OTHER TYPES OF WORKER

What is a worker? A worker either is an employee (i.e has an employment contract) or has a contract to personally carry out work or services not as part of their own business.

Dailies could be considered eligible workers if they are aged 22 to state pension age and earn over £192 a week or £833 a month (2019/20).  Therefore duties around notifications to workers  regarding the pension scheme or postponement must apply and they must be informed in writing of how they are affected.

They must also be assessed individually each time they are paid.  A company should consider using postponement for dailies.

If they are not paid in the week when the postponement ends then they will not meet the criteria to be enrolled and will be postponed again.  If they are paid in that week and they meet the enrolment criteria then they will be enrolled in the scheme.

Cast and Crowd could also fall into the category of worker and need to be postponed or enrolled.  The Equity Pension Scheme is a qualifying scheme and can be joined even if the cast member is not a member of Equity itself.  To avoid being auto-enrolled into a company’s scheme and potentially ending up with many small pensions a cast member may choose to enrol in the Equity Pension Scheme.  Equally a cast member may wish to enrol in the company’s scheme.  They should therefore be communicated with in exactly the same way if they are an eligible worker as all other eligible staff members.

MINIMUM PENSION CONTRIBUTION RATES 

The table below shows the minimum contribution rates for Employers and Staff. 

Date Employer minimum contribution Staff contribution Total minimum contribution
6 April 2019 onwards                        3%              5%                      8%

https://www.thepensionsregulator.gov.uk/en/employers/new-employers/im-an-employer-who-has-to-provide-a-pension/choose-a-pension-scheme/understanding-your-costs/making-contributions-to-your-pension-scheme-

Always check with The Pensions Regulator for the latest thresholds used to calculate qualifying earnings.

The Pensions Regulator – Thresholds

There may be other costs to capture in addition to contributions, such as implementation costs for your organisation or the pension scheme’s annual management fees and administrative charges.

ONGOING RESPONSIBILITIES

Each time payroll is run staff should be assessed to see if they need to be auto-enrolled – both new starters and existing employees.

Any requests to join or leave the scheme received must be actioned in line with the employer’s obligations.

If staff opt-out of the pension scheme (i.e. leave within one month of being enrolled) the employer must stop taking a pension contribution from their pay and repay all contributions paid to date within one month of their request.

Employers have to keep records for six years detailing the following:

  • the names and addresses of employees put into a pension scheme
  • records that show when money was paid into the pension scheme
  • any requests to join or leave the pension scheme
  • the pension scheme reference or registry number

Requests to leave the pension scheme must be kept for four years.