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A Practice Manager’s Guide to auto-enrolment pensions

A Practice Manager’s Guide to auto-enrolment pensionsFrom billboards to TV ads, seemingly everywhere you turn at the moment there’s a reference to the new workplace pension rules that come into force shortly. And, just like any other business, GP practices need to ensure they comply with the rules.

The good news is that the majority of practices will meet the much-vaunted auto-enrolment rules, simply because most employees will already be in the NHS Pension Scheme. The bad news is that there are also plenty of instances where employees may need to be enrolled into an alternative scheme.

So, in response to questions from practice managers and a thread on the Practice Index Forum, here’s a handy guide to the new rules:

Know your staging date

To complicate matters, different practices have different auto-enrolment staging dates. Your staging date is the date your automatic enrolment duties start and is based on the number of people in your PAYE scheme as of 1 April 2012. You can find out your likely staging date by checking the staging dates by PAYE scheme size or by using The Pensions Regulator (TPR) staging date tool.

Categorise your staff

The next step is to categorise all workers into one of three categories:

Eligible Jobholders

  • Aged 22 or over
  • Under state pension age, which is fluid these days!
  • Earning more than £10,000 a year in 2016/17.

Eligible jobholders must be automatically enrolled into a suitable pension scheme unless they are members of an existing qualifying scheme, such as the NHS Pension Scheme. 

Non-eligible Jobholders

  • Earning more than £5,824 a year in 2016/17
  • Not eligible jobholders

Non-eligible jobholders must be offered a pension on the same basis as eligible jobholders, but they must apply to join rather than being automatically enrolled.

Entitled Workers

  • Aged over 16
  • Earning under £5,824 per annum in 2016/17

Entitled workers have to be offered access to a pension scheme, but practices do not have to make employer contributions.

The following types of workers do not have to be automatically enrolled: individuals who are leaving employment, those who have cancelled scheme membership in the period before automatic enrolment and those subject to HMRC tax protected status.

Further information regarding worker status can be found here.

Exceptions to the rule

As mentioned above, most GP practices will meet auto-enrolment rules because most employees will already be in the NHS scheme, which is a qualifying scheme that meets the criteria set out by the Pension Regulator. There are however some instances where the NHS pension scheme won’t be suitable:

  • Those who are already in receipt of a NHS pension – including those who have taken 24-hour retirement and are therefore not allowed to rejoin the NHS pension scheme. If the person in question is aged under 65 they have to be offered an alternative pension scheme.
  • Those who work full time at another trust and have reached the full time equivalent pensionable earnings that can be paid into the NHS scheme. An alternative scheme must be provided.

So, for example, a 60-year-old salaried GP in receipt of an NHS pension from the 1995 section of the scheme, but who has returned to work for you, will not be able to be enrolled in the NHS pension scheme, but by virtue of being re-employed again and being under the current State Retirement Age (for men) will need to have an alternative pension scheme offered.

The National Employment Savings Trust (NEST), Standard Life and The Prudential are examples of Alternative Qualifying Pension Schemes (AQPS). There are many pension providers in the marketplace and employers are free to choose from a wide range of qualifying pension schemes.

The new employee joiner questionnaire will help you capture details from new employees regarding their current status within the NHSPS. This has been updated to include questions to establish eligibility for automatic enrolment.

Communication

Just to complicate communication, there are different information requirements for each category of worker. This NHS Employers page contains a template letter which you can send to workers ahead of your staging date and the statutory letter templates created by The Pensions Regulator (TPR), in addition to examples of where you can find links to employee communications.

The Pensions Regulator has further detailed information on their website including:

  • what generic information you must provide to all workers
  • timescales for providing the information
  • the ways in which you can provide the information.

We hope the above helps, even if it does just share a snapshot of the very detailed legislation that’s coming into force. Plenty more information is available by clicking on the links – good luck with it!

Have you got any questions about auto-enrolment that you would like us to answer? Let us know below or in the Practice Index Forum here.

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Topics trending in the forum:

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One Response to “A Practice Manager’s Guide to auto-enrolment pensions”
  1. Riz Says:

    Thanks for this.

    Annoying that NHS Pensions hasn’t released a guide that’s easy to follow.

    I’ve heard this process will have to be done every three years.

    Reply

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