I’m sharing the update that the Pension Regulator has sent us. It really is good to see this stuff coming through and I’m looking forward to incorporating a lot of this material into our training to employers , payroll agents and accountants.
There’s a new advertising campaign and a website update
TPR will soon be launching a new advertising campaign – and the refreshed Step by Step guide (now live) explains to employers what they will need to do to meet their workplace pension duties.
Around half of all employers will have just one or two members of staff. The step by step guide is designed with the needs of these really small employers in mind. It is streamlined and interactive to help employers who may not have pension experience.
The step by step journey for employers has 5 steps:
1) Confirm who to contact
2) Choose a pension scheme
3) Work out who you need to enrol and put them in
4) Write to your staff
5) Complete the declaration of compliance (and continue with ongoing duties)
To see the countdown to the advertising launch here’s another video
You can share these videos with employers either by sending them the embed code or the link to the videos.
Do you have clients who are due to submit their declaration of compliance?
Thousands of small and micro employers who staged this summer need to complete a declaration of compliance within five months of their staging date. Employers must submit information to the regulator about how they have complied with their employer duties by the statutory deadline.
Those who do not could be fined. If you have clients who staged this summer, make sure that they do not risk incurring a fine: ensure they have met their duties and their declaration of compliance is completed on time.
See http://www.tpr.gov.uk/completing-the-declaration-of-compliance.aspx ….for more information and a link to a declaration of compliance checklist.
How to help your clients with no staff to enrol
If your client has one or more workers, even if none of your client’s staff are eligible for automatic enrolment, they will still need to write to their staff to let them know what’s happening – as well as having to complete a declaration of compliance.
And their staff can ask to join a pension scheme. A scheme only needs to be put in place if and when they ask to join or their circumstances change and they become eligible for automatic enrolment.
Only if they have no staff, or only have one employee who is also a director of the company, will they be considered to not be an employer – in which case, they should not make a declaration of compliance, but should complete this form:
Automatic enrolment: small and micro employers need your services
Our research has indicated that over half of micro employers who are due to stage next year haven’t started making plans for automatic enrolment yet. Most of the employers have told us that they will seek the help of business advisers. Some of your clients are likely to be very late in their preparations when they approach their advisers, so you may wish to proactively contact your clients and find out when their duties start.
· Tax relief on member’s pension contributions
Many small employers and their advisers do not realise that there are two ways that the tax relief on staff members’ pension contribution can be applied. Many pension schemes only support one tax relief method, although some pension providers allow the employer to choose either method, and it is important to understand which system your clients should be using.
One method, known as ‘Relief at source’, means the employer takes the member’s pension contribution after tax has been deducted – and the pension provider claims 20% tax back from HM Revenue & Customs (HMRC) and adds it to their pension pot. Higher rate taxpayers will have to complete an HMRC tax Self Assessment in order to reclaim the rest of the tax paid on their contributions. Staff who earn no more than their income tax Personal Allowance (currently £10,600 a year) do not pay tax, but they would still get the 20% tax relief (even though they haven’t paid any income tax on their contributions). Group Personal Pensions, the government scheme and some master trusts normally calculate tax relief this way.
The other option, known as ‘Net pay arrangement’ is that the employer does not deduct any tax from the member of staff’s contributions and pays them to the pension provider gross of tax. The member of staff wouldn’t get any tax relief benefit if they earn below the income tax personal allowance. However, higher rate taxpayers may prefer this method, as they would automatically get full tax relief through payroll without having to complete an HMRC tax self assessment. Some master trusts calculate tax relief this way.
For example, under Relief at source, a member of staff earning £10,400 per annum, whose pensionable earnings (basic pay) are £200 per week and who is paying a 1% member contribution, would have £1.60 per week deducted and paid to the pension scheme. The scheme would then claim £0.40 from HMRC so that a total of £2 per week would be paid into the member of staff’s pension pot. However, under Net pay arrangement, the same member of staff would have the full £2 per week deducted from their pay and paid into their pension pot. As the individual earns under the HMRC personal tax allowance threshold, they don’t pay income tax and aren’t able to claim any money back from HMRC.
Most pension providers only support one of these methods – so you should find out which one needs to be used by each client.
For more information look at the ‘tax relief’ section at