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Revised Implementation Proposals for Workplace Pensions Reform
Monday, April 2nd, 2012
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It seems as though we are always writing about the amendment and revision of the implementation timetable for auto-enrolment!
On 25 January 2012, Steve Webb, Pensions Minister, announced the publication of a revised timetable for auto-enrolment in the light of his previous announcement in November 2011. This said that the staging dates for small employers (49 employees or less) was to be put back, which impacted on other employers who may have more employees. We were made aware, however, that the announcement only affected employers with UNDER 250 employees and employers with 250 employees or more would be unaffected.
This enabled us to have clear guidance on the staging dates for those employers, as follows:
| Staging Date Schedule (Large Employers) | |
| Employer Size (by PAYE Scheme) | Staging date |
| 120,000 or more | 1 October 2012 |
| 50,000 – 119,999 | 1 November 2012 |
| 30,000 – 49,999 | 1 January 2013 |
| 20,000 – 29,999 | 1 February 2013 |
| 10,000 – 19,999 | 1 March 2013 |
| 6,000 – 9,999 | 1 April 2013 |
| 4,100 – 5,999 | 1 May 2013 |
| 4,000 – 4,099 | 1 June 2013 |
| 3,000 – 3,999 | 1 July 2013 |
| 2,000 – 2,999 | 1 August 2013 |
| 1,250 – 1,999 | 1 September 2013 |
| 800 – 1,249 | 1 October 2013 |
| 500 – 799 | 1 November 2013 |
| 350 – 499 | 1 January 2014 |
| 250 – 349 | 1 February 2014 |
The above table applies to all employers with 250 or more workers in their PAYE scheme as at 01 April 2012.
The announcement in January 2012 made clear that all other employers, who originally had staging dates of 01 April 2014 or later, as set in the Employers’ Duties (Implementation) Regulations 2010, WOULD be affected and that further details would be provided in due course.
Last week saw this issue of an important consultation by the DWP and the introduction of the draft Employers’ Duties (Implementation) (Amendment) Regulations 2012, which confirmed some things and changed others. It is important to look at these individually:
Medium Employers (50 – 249 Employees)
The staging dates will be spread between March 2014 and April 2015.
| Staging Date Schedule (Medium Employers) | ||
| Employer Size (by PAYE Scheme) |
Staging Date From: | To: |
| 160-249 | 1st March 2014 | 1st April 2014 |
| 90-159 | 1st April 2014 | 1st May 2014 |
| 62-89 | 1st June 2014 | 1st July 2014 |
| 61-61 | 1st July 2014 | 1st August 2014 |
| 60-60 | 1st September 2014 | 1st October 2014 |
| 59- 59 | 1st October 2014 | 1st November 2014 |
| 58-58 | 1st December 2014 | 1st January 2015 |
| 54-57 | 1st February 2015 | 1st March 2015 |
| 50-53 | 1st March 2015 | 1st April 2105 |
The above table with staging dates applies to all employers with 249 – 50 or more workers in their PAYE scheme as at 01 April 2012. This does not change even if the number of employees in the PAYE scheme differs between 01 April 2012 and the staging date.
Note that medium-sized employers are being staged in smaller numbers which will allow pension providers and the Pensions Regulator (tPR) to switch focus and reallocate resources to the staging of smaller employers.
Small Employers (49 or less)
The majority of these staging dates fall into the next Parliament.
The staging dates
| Staging Date Schedule (Small Employers) | ||
| Employer Size (by PAYE Scheme) | Staging Date From: | To: |
| Less than 30 with the last 2 characters in their PAYE reference numbers 92, A1-A9, B1–B9, AA–AZ, BA-BW, M1-M9, MA-MZ, Z1-Z9, ZA-ZZ, 0A-0Z, 1A-1Z or 2A-2Z | 1st May 2015 | 1st June 2015 |
| Less than 30 with the last 2 characters in their PAYE reference numbers BX | 1st June 2015 | 1st July 2015 |
| 40 – 49 | 1st July 2015 | 1st August 2015 |
| Less than 30 with the last 2 characters in their PAYE reference numbers BY | 1st August 2015 | 1st September 2015 |
| 30-39 | 1st September 2015 | 1st October 2015 |
| Less than 30 with the last 2 characters in their PAYE reference numbers BZ | 1st October 2015 | 1st November 2015 |
| Less than 30 with the last 2 characters in their PAYE reference numbers 02-04, C1-C9, D1-D9, CA-CZ, or DA-DZ | 1st December 2015 | 1st January 2016 |
| Less than 30 with the last 2 characters in their PAYE reference numbers 00, 05-07, E1-E9 or EA-EZ | 1st January 2016 | 1st February 2016 |
| Less than 30 with the last 2 characters in their PAYE reference numbers 01, 08-11, F1-F9, G1-G9, FA-FZ or GA-GZ | 1st February 2016 | 1st March 2016 |
| Less than 30 with the last 2 characters in their PAYE reference numbers 12-16, 3A-3Z, H1-H9 or HA-HZ | 1st March 2016 | 1st April 2016 |
| Less than 30 with the last 2 characters in their PAYE reference numbers I1-I9 or IA-IZ | 1st April 2016 | 1st May 2016 |
| Less than 30 with the last 2 characters in their PAYE reference numbers 17-22, 4A-4Z, J1-J9 or JA-JZ | 1st May 2016 | 1st June 2016 |
| Less than 30 with the last 2 characters in their PAYE reference numbers 23-29, 5A-5Z, K1-K9 or KA-KZ | 1st June 2016 | 1st July 2016 |
| Less than 30 with the last 2 characters in their PAYE reference numbers 30-37, 6A-6Z, L1-L9 or LA-LZ | 1st July 2016 | 1st August 2016 |
| Less than 30 with the last 2 characters in their PAYE reference numbers N1-N9 or NA-NZ | 1st August 2016 | 1st September 2016 |
| Less than 30 with the last 2 characters in their PAYE reference numbers 38-46, 7A-7Z, O1-O9 or OA-OZ | 1st September 2016 | 1st October 2016 |
| Less than 30 with the last 2 characters in their PAYE reference numbers 47-57, 8A-8Z, Q1-Q9, R1-R9, S1-S9, T1-T9, QA-QZ, RA-RZ, SA-SZ or TA-TZ | 1st October 2016 | 1st November 2016 |
| Less than 30 with the last 2 characters in their PAYE reference numbers 58-69, 9A-9Z, U1-U9, V1-V9, W1-W9, UA-UZ, VA-VZ or WA-WZ | 1st December 2016 | 1st January 2017 |
| Less than 30 with the last 2 characters in their PAYE reference numbers 70-83, X1-X9, Y1-Y9, XA-XZ, or YA-YZ | 1st January 2017 | 1st February 2017 |
| Less than 30 with the last 2 characters in their PAYE reference numbers P1-P9 or PA-PZ | 1st February 2017 | 1st March 2017 |
| Less than 30 with the last 2 characters in their PAYE reference numbers 84-91, 93-99 | 1st March 2017 | 1st April 2017 |
| Less than 30 persons in the PAYE scheme unless otherwise described | 1st March 2017 | 1st April 2017 |
| Employer who does not have a PAYE scheme | 1st March 2017 | 1st April 2017 |
| New employer (PAYE income first payable between 1st April 2012 and 31st March 2013) | 1st April 2017 | 1st May 2017 |
| New employer (PAYE income first payable between 1st April 2013 and 31st March 2014) | 1st June 2017 | 1st July 2017 |
| New employer (PAYE income first payable between 1st April 2014 and 31st March 2015) | 1st July 2017 | 1st August 2017 |
| New employer (PAYE income first payable between 1st April 2015 and 31st December 2015) | 1st September 2017 | 1st October 2017 |
| New employer (PAYE income first payable between 1st January 2016 and 30th September 2016) | 1st October 2017 | 1st November 2017 |
| New employer (PAYE income first payable between 1st October 2016 and 30th June 2017) | 1st December 2017 | 1st January 2018 |
| New employer (PAYE income first payable between 1st July 2017 and 30th September 2017) | 1st January 2018 | 1st February 2018 |
| New PAYE employer ‘born’ 1st October 2017 onwards | 1st October 2017 | Immediate duty |
The above table with staging dates applies to all employers with 49 or less employees in their PAYE scheme as at 01 April 2012 (or new schemes). This does not change even if the number of employees in the PAYE scheme differs between 01 April 2012 and the staging date.
Employers with fewer than 50 workers who are part of a multiple employer PAYE scheme
There is no requirement for a small employer with less than 50 employees to have a staging date before 01 August 2015. Currently, employers with two or more PAYE schemes must introduce auto-enrolment across all of their schemes from the earliest staging date, irrespective of the dates shown in the schedule for the other schemes. Under this arrangement, it could be that under such a multiple PAYE scheme, there is an employer who has less than 50 employees but is brought into auto-enrolment sooner than 01 August 2015 simply as a result of being part this multiple arrangement.
To ensure that small employers can be divorced out of a larger PAYE scheme, a new definition of ‘small employer’ has been inserted into the Employers’ Duties (Implementation) (Amendment) Regulations 2012. This is defined as any employer who, at 01 April 2012 has fewer than 50 full time equivalent workers. The number of full time equivalent workers is calculated using the formula TH/37.50, where TH is equal to the total hours per week for which all workers are contracted to work.
For example:
A company has 60 workers – 20 work 37.5 hours per week and 40 work 20 hours per week. The full time equivalent number of workers is calculated as:
- 20 * 37.5 hours = 750 hours
- 40 * 20 hours = 800 hours
- Total weekly hours are 750 + 800 = 1,550
The number of full time equivalent workers is calculated as 1,550 / 37.50. The company has 41.33 workers and, therefore, falls into the category of being a small employer.
As such, if this employer determines that, on 01 April 2012, they are a small employer because their full time equivalent workforce if fewer than 50 workers, they will not be required to notify the Pensions Regulator. Instead, they will be prescribed a new staging date between 01 August 2015 and 01 April 2017, as follows:
| Staging Date Schedule (Multiple PAYE Scheme Small Employers) | |
| Original Staging Date | Revised Staging Date |
| 1st October and 1st November 2012 | 1st August 2015 |
| 1st January and 1st February 2013 | 1st October 2015 |
| 1st March and 1st April 2013 | 1st January 2016 |
| 1st May and 1st June 2013 | 1st February 2016 |
| 1st July and 1st August 2013 | 1st March 2016 |
| 1st September and 1st October 2013 | 1st April 2016 |
| 1st November 2013 and 1st January 2014 | 1st May 2016 |
| 1st February and 1st April 2014 | 1st July 2016 |
| 1st May and 1st July 2014 | 1st September 2016 |
| 1st August and 1st October 2014 | 1st November 2016 |
| 1st November 2014 and 1st January 2015 | 1st February 2017 |
| 1st March 2015 and 1st April 2015 | 1st April 2017 |
The above table with staging dates applies to all small employers that come from multiple PAYE schemes with 49 or less employees in their PAYE scheme as at 01 April 2012 (or new schemes). This does not change even if the number of employees in the PAYE scheme differs between 01 April 2012 and the staging date.
Those employers whose PAYE schemes are artificially swollen by non-workers
Some PAYE schemes contain non-workers (for example, ex-employees who are paid a company pension through the payroll) who will be counted in the determination of the size of an employer’s PAYE scheme. This is because the size of an employer’s PAYE scheme is defined by the number of ‘persons’ within that scheme, rather than employees.
The amendments described above in respect of ‘small employers’ using multiple employer PAYE schemes will also benefit those employers with artificially swollen PAYE schemes who actually have fewer than 50 full time equivalent workers.
Phasing of Minimum Contributions
For employers using money purchase and personal pension schemes, during the transition periods between 2012 and 2018, the minimum contributions under the quality requirement are amended in the Employers’ Duties (Implementation) (Amendment) Regulations 2012 as follows:
| Money Purchase and Personal Pension Schemes | |||
| Minimum Contributions (Percentages of earnings in the QEB) | Transition Periods | From 01 October 2018 | |
| 01 July 2012 to 30 September 2017 | 1 October 2017 to 30 September 2018 | ||
| Employer contributions | 1% | 2% | 3% |
| Total contributions | 2% | 5% | 8% |
For the purposes of certification, no mention is made in the consultation document but these are assumed to follow the above dates as follows:
| Money Purchase and Personal Pension Schemes | |||
| Minimum Contributions (Percentages for certification) | Transition Periods | October 2018 | |
| 01 July 2012 to 30 September 2017 | 1 October 2017 to 30 September 2018 | ||
| Test 1: employer total |
2% |
3% |
4% |
| Test 2: employer total |
1% |
2% |
3% |
| Test 3: employer total |
1% |
2% |
3% |
The transitional periods for defined benefit and hybrid schemes are similarly extended to 30 September 2017.
The consultation on the draft legislation applies toEngland,WalesandScotlandonly. It is anticipated thatNorthern Irelandwill make a corresponding Order.
Further Information
- Payroll Help 06 February 2012 – New Timetable Clarifies Auto-Enrolment Dates
- DWP – Consultation and Draft Legislation March 2012
