To quote the TV adverts, “You can’t ignore the Workplace Pension”. Essentially, every employer with at least one staff member is legally required to automatically enrol ‘eligible’ employees into a pension scheme. The employer must also contribute to that pension, up to a maximum of 3% of an employee’s salary.
To determine whether an employee is eligible to be automatically enrolled for a pension, they need to be:
- classed as a ‘worker’;
- aged between 22 and State Pension age;
- earning at least £10,000 per year; and
- usually (‘ordinarily’) working in the UK.
The process is automatic for employees; they do not have to do anything to be enrolled. However, it is not automatic for employers and as such care should be taken to ensure that as an employer you are complying with your obligations and duties.
As your employees’ employment continues, you need to consider your re-enrolment duties which arise around every 3 years after auto-enrolment. The nature of your duties at the time of re-enrolment will depend on whether or not you have staff to re-enrol. Whether you are or are not re-enrolling your staff, you will at the very least need to complete a re-declaration to confirm that you have complied with your obligations.
Throughout the course of their employment, your employees then have the right to opt-out of any pension scheme. However, this right to opt-out is to be exercised only by the employee and should an employer look to act otherwise, as referred to below, then the Pensions Regulator will most likely look to prosecute.
Potential prosecution by the Pensions Regulator
Recruitment company Workchain, as was formerly Smart Recruitment UK, may potentially be prosecuted by the Pensions Regulator after being accused of using employees’ personal data to terminate their auto-enrolments into pension schemes.
Seven of the company’s directors and senior staff members have allegedly used a computer programme to effect the terminations of their employees’ pension memberships. This will be the first time the Pensions Regulator has looked to prosecute a company regarding this particular breach of section 1(1) of the Computer Misuse Act 1990.
The Defendants have been summoned to Derby Magistrates Court on 7 June where a conviction for computer misuse carries a maximum sentence of six months' imprisonment and/or an unlimited fine. Were the matter to be committed to the Crown Court, the conviction could be two years' imprisonment and/or an unlimited fine.
Kate Smith, Head of Pensions at Aegon has commented that it is a "clear signal that outrageous behaviour by unscrupulous employers to avoid paying pension contributions will not be tolerated".
She then went on to say that "Illegally opting employees out of their workplace pension, and denying them access to an employer contribution is a serious offence leading to criminal sanctions including imprisonment. The opt-out rules have been designed to protect employees from employer coercion, and should be an action taken by the employee alone."
If you need assistance with any employment issues relating to your auto-enrolment obligations, or any other employment issue, please email me at email@example.com, or call our Employment Team on 01908 660966 or 01604 828282.