• April 2018

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    6   7   8   9   1011121
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    • 6th - Start of 2018-2019 tax year
    • 19th - HMRC cheque payments due
    • 22nd - HMRC BACS payments due
    • 2nd - Easter Monday (E,W,NI)
  • May 2018

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    • 7th - May Bank Holiday (E,W,NI,S)
    • 19th - HMRC cheque payments due
    • 22nd - HMRC BACS payments due
    • 28th - Spring Bank Holiday (E,W,NI,S)
    • 31st - Employee P60s due
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    • 6th - Forms P11D, P11D(b) and P9D due
    • 6th - Form 42 Due
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  • September 2018

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  • November 2018

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  • February 2019

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    • 17th - St. Patrick's Day (NI)
    • 19th - HMRC cheque payments due
    • 22nd - HMRC BACS payments due
UK Tax Week

   07 Dec - 13 Dec

63

 

Taking the drama out of Auto Enrolment

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Summary

Her Majesty's Government's (HMG) legislated Workplace Pension Reform changes to pensions, known as Auto Enrolment, will encourage millions of people to save for their retirement. This insight article provides details of the Auto Enrolment responsibilities of companies and productions to their employees and contractees. It identifies the necessary planning stages and the levels of employer and employee legislated contributions, and includes details of Sargent-Disc's Auto Enrolment and payroll solution, which is designed to provide an integrated and modular service to your company or production.

Tagged: Payroll, SD Online, Corporate, Employee, Services, Pensions

Auto Enrolment

What Is It?

Over the last forty years, fewer and fewer people have been saving for retirement in the UK. By 2012 only one in three private sector workers were in pension schemes. As the proportion of older people grows within the population it is likely that by 2050 there will be only two working people for every British pensioner. HMG's legislated changes to pensions, known as Auto Enrolment, aim to address the challenge, and provide a new way for people to save for their retirement - many for the first time.

It is called Automatic Enrolment because it is automatic for the workers - they don't need to do anything to be enrolled into a pension scheme, but it is not automatic for the employer, who must take steps to make sure eligible workers are enrolled into a pension scheme. Even if a pension scheme is already in place, it needs to be suitable for Automatic Enrolment. Automatic Enrolment is a legal duty and non-compliance can result in the employer being fined.

Auto Enrolment can be daunting for the film and television industries. The majority of companies are small medium sized enterprises (SME's) employing from 1 to 249 people. In addition one-third of the workforce in television[1] and nearly half (46%) in film production[2] are on Schedule D freelance contracts, sometimes employed through third party agencies and often on short term and periodic contracts. This makes for a less than natural fit with many of the standard employment Auto Enrolment processes.

 

Employers Responsibilities

Employers are legally obliged to fulfill their Auto Enrolment duties by the date specified by The Pension Regulator for the company. This date is known as 'The Staging Date' and is determined by a company's largest PAYE tax reference as at the 1st of April 2012. Companies can confirm their exact Staging Date by going to http://www.thepensionsregulator.gov.uk/employers/staging-date.aspx and entering their PAYE reference(s).

The employer is the legal entity named in an employee's employment contract or in a freelancer's personal services contract. For workers supplied to a third party by an agent, in order to allow them to perform work personally, the employer will be the entity responsible for paying the worker named within the arrangement. If payment responsibility cannot be determined, the entity that actually pays the worker is responsible.

The employer is legally obliged to assess their workers for Auto Enrolment eligibility - and if they qualify, to enrol them into a qualifying Auto Enrolment pension scheme. Film, television and other media companies will have a legal obligation to:

  • Nominate a contact with The Pension Regulator 
  • Communicate auto enrolment information to workers in a timely and appropriate manner
  • Automatically enrol all eligible jobholders in a qualifying pension scheme
  • Allow non-eligible jobholders to opt-in and entitled workers to join
  • Maintain contributions
  • Complete their declaration of compliance with The Pension Regulator every three years
  • Keep records
  • Automatically re-enrol all eligible jobholders who have opted out every three years

 

Who must the Employer Enrol?

The pension reforms require employers to automatically enrol The pension reforms require employers to automatically enrol eligible workers (aged 22 and over, earning £10,000 [3] per annum or more) into a workplace pension scheme. 'Workers who do not wish to take part will have one month following their enrolment to opt-out and get a refund of their contributions.

Others may also need to be enrolled: non-eligible workers (aged between 16 and 75 and earning over £5876 [3] but under £10,000 per annum) who choose to 'opt in' to the scheme, or entitled workers (earning £5824 or less) who request to join a pension scheme. Employers are not obliged to make pension contributions for the entitled workers joining. The rules also apply to freelancers who contract personally.  

The table below illustrates which employees are entitled, eligible and non-eligible.

 

Qualified Earnings Table

Table 1: Qualifying Earnings

 

Auto Enrolment Contributions

Once a worker is auto enrolled, the employer is required to make minimum pension contributions each pay period. These contributions are usually calculated as a percentage of the worker's gross earnings that fall into the qualifying earnings band of £5876 and £45,000 annually (£113 and £866 weekly or £490 and £3,750 monthly). Qualifying earnings include salary, wages, commission, bonuses, overtime and statutory payments (excluding expenses). 

Other earnings bases can be used, but require certification by the Department of Work and Pensions (DWP). Minimum levels of contributions are being phased in as per the table below. 

Government tax relief on the employee's share is also available, subject to eligibility. Employers without an existing qualifying workplace pension scheme will have to choose a scheme for their employees - and will need to take advice to identify a suitable provider.

 

Contributions table

Table 2: Contributions

 

Planning For Auto Enrolment

It is important that companies allow enough time to plan and manage the Auto Enrolment process to ensure a painless transition. The Pensions Regulator recommends twenty one months to plan for the change - eighteen months prior to and three months after, the Staging Date. The check list below covers the planning areas an employer needs to factor into their schedule:

Pre Staging

  • Identify your Staging Date
  • Nominate your company's Auto Enrolment contact
  • Develop an Auto Enrolment transition plan
  • Know your workforce - ensure all required employee data is captured and workers in or out of scope are identified
  • Check your company's Auto Enrolment processes
  • Review company pension arrangements
  • Communicate Auto Enrolment processes to all staff

Post Staging

  • Enrol eligible jobholders and non-eligible jobholders who opt in
  • Maintain Auto Enrolment records
  • Ongoing responsibilities of assessment, communications and payment of contributions
  • Complete a declaration of compliance with The Pensions Regulator

 

How can Sargent-Disc help?

Sargent-Disc has developed a modular Auto Enrolment solution designed to provide an integrated pension and payroll service for your company or production.

The solution combines the Auto Enrolment pension process with Sargent-Disc's tried and tested payroll service. It addresses the complex needs of the film, television and media industries for a wide range of roles and contracts (short term, weekly, periodic) and direct or third party payments. There is a range of pension providers offering qualifying Auto Enrolment pension schemes, that Sargent-Disc integrate with. These include Fidelity, Now Pensions, Source Pensions, Scottish Widows and the National Employers Savings Trust Corporation(NEST)[superscript 4].

Auto Enrolment links directly to Sargent-Disc's payroll service, ensuring seamless integration and automating many of the time consuming processes for the employer. In addition, employers and employees will be able to view their Auto Enrolment communications, along with pension and payroll reports via SD Online, Sargent-Disc's secure online portal.

 

Our standard solution includes the following:

  • AE Pension Scheme - Sargent-Disc will set up a pension scheme with NEST
  • Assessment - Carried out by Sargent-Disc from the staging date as part of the payroll process.
  • Postponement - 3 months maximum postponement applied on the staging date, start date and on eligibility (when applicable)
  • Contributions - Minimum contributions are calculated from Qualifying Earnings (see Auto Enrolment Contributions section above)
  • Sargent-Disc will email all statutory communications to the employees and publish them on SD Online (postponement, right to join and enrolment notices)
  • Interface with Pension Scheme - Upload enrolment and contribution files on NEST. Administer opt in and opt out requests (process refunds if applicable)

 

 AE diagram grey background

 

Figure 1: The SD Auto Enrolment Process

 

The SD Auto Enrolment solution provides the following benefits:

  • Auto Enrolment assessment through payroll
  • Calculation of pension contributions for different schemes and providers
  • Integrated payroll and Auto Enrolment administration for weekly, periodic and monthly payments
  • Issuing of Auto Enrolment notices via SD Online
  • A modular system interfaced with NEST and a choice of other pension providers, currently including:

          - Fidelity
          - Now Pensions
          - Scottish Widows

  • SD Online - providing access to payroll, pension and pay scale reports

 

If you require a solution with a pension provider not mentioned above please contact us at payroll@sargent-disc.com



[1] Producers Association of Cinema and Television

[2] BFI Statistical Yearbook 2013

[3] Figures for 2017/18

[4] NEST is a non-departmental public body set up specifically to offer a workplace pension for Auto-Enrolment. The Personal Accounts Delivery Authority, created as part of The Pensions Act 2007, developed and established the NEST Corporation in 2010.  NEST is accountable to Parliament and offers an occupational money purchase scheme to enable employers to meet their new obligations.

 

Please Note: This article is for information purposes only. 

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