Our investigations have found that some employers are making common errors by skipping important steps in respect of calculating pensions contributions and communications to staff.
Key errors include:
- using incorrect earnings thresholds
- errors in communications to staff about automatic enrolment
- miscalculating contributions for staff receiving maternity pay
Using incorrect earnings thresholds
Every year, the Department for Work and Pensions (DWP) reviews the earnings thresholds for automatic enrolment. We update earnings thresholds for the current tax year with the new thresholds after DWP has announced them.
It’s important to make sure you’re using the correct earnings thresholds as mistakes here could put your staff at risk of not receiving the pensions contributions they are due.
Errors in communications to staff
Be aware that even if you’ve successfully enrolled eligible staff into your pension scheme and make regular contributions, errors in your communications to staff could put you at risk of non-compliance.
Within 6 weeks after your duties start date, it’s your legal duty to write to all your staff individually to explain how automatic enrolment applies to them.
You should ensure you check our information on writing to your staff. Use our letter templates to help you communicate to your staff.
Miscalculating contributions for staff receiving maternity pay
If applicable, you should regularly check government guidance on maternity pay as miscalculating this can impact pensions contributions.
How to avoid common errors
Ensure you avoid making these common errors as they put you at risk of non-compliance and could be costly. For example, you’ll need to backdate all payments for your staff that have been receiving incorrect contributions and in some cases these mistakes can lead to financial penalties.
You should:
- check your ongoing duties to avoid skipping important steps
- when completing re-enrolment, which you must carry out every three years, you should check your systems and processes are up to date and running smoothly.
Remember, re-enrolment and re-declaration are your legal duties and if you don't act you could be fined.
We know the majority of employers want to do the right thing for their staff. Avoid unnecessary fines and/or penalty notices by following the relevant guidance on workplace pension duties for employers.
If someone is helping you with your automatic enrolment duties, for example an agent or adviser we've created some short clips that may help avoid making some common errors.