Your questions answered
Frequently asked questions about automatic enrolment
Q: Are there any exclusions to the employer duties?
A: Yes, there are exclusions and they are split into two.
People who are treated as workers
The following people are treated as workers but are not covered by the employer duties:
- those who do not work or ordinarily work on Great Britain
- those under age 16, and
- those aged 75 and over.
People who are not treated as workers
The following people are not treated as workers so the employer duties don't apply to them:
- the self employed
- members of the armed forces, and
- directors of companies unless they have a contract of employment to work for that company and there is someone else employed by the company under a contract of employment.
Q: If an employer uses NEST, are they exempt?
A: No. All of the employer duties apply regardless of pension scheme type.
Q: Do the employer duties apply to employers who already have a pension scheme?
A: Yes. Even employers who have an existing pension scheme that is better than the minimum standard will have employer duties to perform - for example telling existing members about how automatic enrolment will affect them, and automatically enrolling new workers.
Q: Who is treated as the employer for agency staff?
A: For the purposes of the employer duties, it is whoever is responsible for paying the worker or whoever actually pays the worker.
Q: What happens if someone works for more than one employer?
A: Each employer will be required to fulfil their employer duties separately, ignoring any other employment or earnings that the worker has.
Q: How do the employer duties apply to hourly paid/zero-hour contract/temporary/seasonal/agency workers on short term contracts who are re-employed?
A: The employer duties apply to these workers each time work is undertaken. For example if a company employs a worker for three months, then employs them again six months later, the employer duties will apply on both occasions.
Q: If an employer uses postponement, how does that affect hourly paid/zero-hour contract/temporary/seasonal/agency workers on short term contracts?
A: Where the contract of employment is for a period of less than three months and the worker has not joined in the meantime, the employer duties fall away at the end of the contract. Where an employer re-employs a worker, they can operate the waiting period again if they wish and do not have to take into account any previous waiting periods.
Q: How are hourly paid/zero-hour contract/temporary/seasonal/agency workers assessed for automatic enrolment?
A: These workers will generally need to be assessed by reference to how the employer pays them and how much they earn. For example if an employer normally pays workers every Friday for work done between Saturday and Thursday, the employer would have to work out how much the workers earned between Saturday and Thursday then determine whether they need to be automatically enrolled or invited to join a pension scheme based on how much they earned.
Q: Can a worker opt out after the end of the opt out period?
A: Yes. Any worker can stop making contributions to a pension scheme at any time. However under current rules, they will not receive a refund of the contributions they have made if the pension scheme is a contract-based scheme, such as a Group Personal Pension. Where the pension scheme is a trust-based scheme, the worker may be able to get a refund.
Q: What solution will you offer for automatic enrolment?
Q: Will you link to NEST?
A: Our research with advisers and employers has shown that most small to medium sized employers will look for a single, uniform solution for their entire workforce. This is particularly the case where there is already a pension scheme in place; we expect that these employers will want as little change as possible.
Scottish Life will work with you to deliver the best solution for all your corporate client in the most cost-effective way. We'll also facilitate the payment of consultancy and adviser charges from within the product ensuring that you can be paid for the services you provide.
However, in some circumstances, the commercial market will struggle to deliver a cost-effective solution, and Nest will have a valuable role to play. This will typically be for small employers and large employers that have a large number of low paid workers combined with high staff turnover. Like other providers, we are working closely with Nest to establish if there are opportunities to provide an integrated solution in these circumstances.
Q: When will Scottish Life be able to run an automatic enrolment scheme?
A: We will be able to automatically enrol workers into our schemes from October 2012. However, for the vast majority of employers this will not be required until 2013 or later.
Q: Does a Limited Liability Partnership (LLP) have to comply with the auto-enrolment requirement?
A: Partners are self-employed, so they're unlikely to have to be auto-enrolled. The auto-enrolment rules only cover 'workers' as defined in pages 6-9 of The Pensions Regulator's Workplace pensions reform – detailed guidance.
However, any employees of the LLP (e.g. administration staff) are likely to be covered by the requirements.
Q. Can an employer have an automatic enrolment scheme where the total contribution rate will be above the eventual minimum contribution required for schemes and well above the interim phased minimum contributions?
A. There's no reason why a scheme cannot provide more than the minimum contributions required by the automatic enrolment regulations. However there is a danger of a scheme effectively encouraging people to opt out by having higher minimum contributions than required.
Whilst there are no specific limits to the minimum contributions a scheme can require, the Pensions Regulator can use its disciplinary powers in cases where it appears that the reason for the high minimum employee contributions is to encourage opt–outs.
Each case would be taken on its merits but it would look particularly closely at cases where the employer contribution is the minimum required by legislation but the employee contribution was higher. If the employer provided one section of the scheme for those wanting to pay the minimum contributions required by legislation and another for those wanting to contribute at the higher level, the Pensions Regulator would have no issues with that arrangement.
Last update November 2012
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