Who qualifies for auto enrolment?

  • We offer a full suite of services, meaning that we can cater for all your contractors, regardless of industry or circumstance.
  • Workers can opt out of the pension scheme within one month of being automatically enrolled. If this happens, they'll be entitled to a refund of their contributions and will be treated as if they'd never joined the scheme.
  • Employers can postpone the duty to automatically enrol new workers by operating a waiting period of up to three months.
  • About every three years, employers will need to automatically re-enrol any jobholder who has opted out or left the pension scheme
  • Penalties for non-compliance are significant - with fixed penalties of £400 and escalating penalties ranging from £50 to £10,000 per day, depending on the size of the employer's PAYE scheme for serious or persistent breaches.

The Act comes into force on 1st October 2012 and applies to all UK-based employers. There are various staging dates, according to how many qualifying staff are employed by a given organisation. See the staging table below:

The legislation includes agency workers in its definition of 'worker', including those on agency payroll, meaning that the agency will have to contribute for contractors working on their payroll. Umbrella employees also fall within the scope. Limited company contractors do not fall within the scope, however.
Three more categories of workers have been identified:

The legislation clearly sets out the information and timeframes that employers and agencies will be required to give to their workers. Penalties can be applied for non-compliance.

  • Manage your own pension scheme in-house - meaning you'll have to set up and manage the auto-enrolment process.
  • Move worker from agency payroll to umbrella provider - this puts the burden of pension admin onto the umbrella provider and may push back the staging dates if the provider has fewer employees than the agency payroll.

We're being advised by leading legal firm Eversheds on implementing the new legislation thoroughly. We're also in discussions with our preferred enrolment provider NEST, as well as meeting our obligations set by TPR and DWP.

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Pensions - our advice

About the Pensions Act 2012

The government is taking steps to encourage people in work to make significant provisions for their retirement through The Pensions Act 2012, as most people have around 20 years of retirement to look forward to.

When does it come into force and what are the contributions?

What our clients think
A professional agency that require minimum contact from my side and this is what I value the most.
- M Kwiatkowski, Multi-Trader
I have been given an excellent and exemplary service. Nothing ever seems too much trouble and this aligned with the new technology you are using to allow PSC clients to look at their business bank statements and run P&Ls for periods of choice, makes you look very good indeed from a client perspective.
- D. Mackinlay, Project Manager
You're very reactive to any of our contractor's queries or problems.
- J. Roome, Accept Engineering

The minimum contribution rate is being phased in as follows:

1%

2%

2%

5%

3%

8%

What's required from the employer/agency?

What are the choices?

Why PayStream?

Eligible jobholders - who'll need to be automatically enrolled into a qualifying scheme, with the ability to opt out. They must be at least 22 years old and below state pension age, work in the UK, and earn more than £8,105 a year.

Know your staging date

Non-eligible jobholders - who aren't eligible for auto enrolment but can opt in to a qualifying pension scheme if they choose. They must be at least 16 years old and below state pension age, and earning between £5,564 and £8,105 a year. You can earn more than £8,105 if you're between 16 and 22, or between state pension age and 75.

Identify who's responsible for auto-enrolling agency workers

Review your pension arrangement to make sure it's a qualifying scheme

Establish admin and payroll systems to deal with automatic and re-enrolment

Let all your workers know about the changes, including non-eligible jobholders and entitled workers. In particular, you need to inform eligible jobholders about the right to opt out, the start and end date of opt-out period, as well as information about the pension scheme and contribution rates.

Start contributing to the workers' pensions

Register with the Pensions Regulator

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Entitled workers - who are entitled to join a pension scheme but not necessarily a qualifying pension scheme. Employers must arrange this but will not be required to make contributions.
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