Auto-enrolment legislation changes – April 2014
In October’s issue of Connection, Simon Parsons outlined the changes following the Government consultation on simplifying the auto-enrolment process, and the changes which came into force on 1 November 2013.
On 1 April 2014 additional changes from the consultation came into force. Here Steven McKenna, Senior Product Manager, discusses the impact of these on employers, along with the changes to auto-enrolment earnings thresholds for the new tax year.
- The automatic enrolment joining window is extended from one month to six weeks
- Previously, an employer had one month from the automatic enrolment date to achieve active membership and issue enrolment information to the jobholder – “the joining window”. This deadline has now been extended to six weeks.
- The deadlines for registration and postponement notices fit with the extended joining window
- In order to create consistency with the joining process, the deadline for issuing postponement notices is also extended to six weeks where an employer decides to use postponement of automatic enrolment, either at their staging date, or when a worker commences employment or becomes eligible for the first time.
What does this mean for employers?
Whilst the original time limits were one month from the start of the pay reference period, the reality is that most employers didn’t know who was to be auto enrolled or postponed due to eligibility until the live payroll was processed; which was often only a few days before the deadline.
These changes, along with the increase to the deadline for employers to provide information to staff about their opt-in and joining rights, mean that employers have a much more realistic chance of meeting their obligations around achieving active membership, exchanging data with the pension provider and issuing all of the statutory communications.
Auto-enrolment earnings thresholds 2014/2015
From 6 April 2014 new auto-enrolment earnings thresholds took effect. The lower and upper levels of qualifying earnings are increased to £5,772 and £41,865 and the earnings trigger for automatic enrolment is also increased to £10,000.
Whilst these values have remained aligned to the National Insurance Lower and Upper Earnings Limits and the Income Tax Personal Allowance, the 2013/2014 auto-enrolment thresholds may need to be used in April depending on the start of the pay reference period and the regular payment day. This is because the National Insurance and Income Tax values are based on the regular payment day, while the auto-enrolment earnings thresholds are based on the first day of the pay reference period.
As the majority of monthly payrolls have a pay reference period of the beginning to the end of the month, the new auto-enrolment thresholds will not take effect until the May payroll, with the April payroll using the previous year’s auto enrolment thresholds, as the 1 April is prior to the start of the new tax year.