Introduced by the government in the Pensions Act 2008, the legislation implementing the main provisions relating to automatic pension enrolment (auto-enrolment) was brought into force on 30 June 2012 by the Pensions Act 2008 (Commencement No 13) Order 2012 (SI2012/1682).

From the 1 October 2012 all employers with over 1200 employees in their PAYE scheme as at 1 April 2012, have been obliged to automatically enrol eligible jobholders into an auto-enrolment scheme unless they are already active members of a qualifying pension scheme. This process will continue to be phased in according to employer PAYE scheme size and will not be completed for all existing employers until April 2017.

New record keeping requirements in relation to Auto Enrolment

There are now new legal requirements for employers as well as trustees, managers and providers of a pension scheme, to keep records about their workers and the pension scheme being used to fulfil their duties under auto-enrolment legislation. The records kept will enable them to demonstrate their compliance with their new duties and, on a practical level, these new rules will provide employers with detailed internal records which will help avoid or resolve potential disputes with employees and allow them to consolidate the existing information they currently hold regarding their workforce.

Sound record keeping is not a new concept and has been advocated by the Regulator in the past and considered to be a vital component in the effective and efficient running of a pension scheme.

Registering with the Regulator

Employers are required to register online with the Regulator within four months of its given staging date. During the registration process certain information will have to be given to the Regulator.

Information which must be provided includes such details as:

  • Employer’s address and postcode
  • Registered Company Number
  • Contact details of the person supplying the information, and their relationship with/capacity within the employer
  • The number of jobholders who are auto-enrolled
  • The number of jobholders for whom auto-enrolment has been postponed
  • The employer scheme reference

The information provided must be accurate and true as the employers are required to certify to the Regulator that this is the case.

Employer Obligations

The legislation requires that employers and schemes are obliged to keep records of auto-enrolments, opt-in and opt-out processes and contributions. These will need to be kept for a period of six years, except for records relating to opt-outs which need only be retained for a period of four years.

Employers are required to keep the following records:

  • Details of the auto-enrolment scheme used to comply with the new legislation
  • The name, NI number, DOB and auto-enrolment date of all jobholders who have been auto-enrolled
  • Copies of all opt-out, opt-in and joining notices received by an employer
  • Evidence of workers’ earnings and contributions
  • The dates on which employer contributions were paid to the pension scheme

An employer that uses a postponement period must also retain records of workers to whom notice of postponement has been given. The following details must be recorded:

  1. Worker’s full name and NI number
  2. Date a postponement notice was given by the employer

Trustees or pension providers also have to fulfil record keeping requirements by keeping the following:

  • Employer pension scheme reference assigned by the Regulator
  • Dates on which each jobholder was auto-enrolled or became an active member of the scheme
  • Names of the jobholders who opt-out and the date on which a valid opt-out notice was received
  • Name, NI number, DOB, gender and residential address of each member of a qualifying scheme.

These new record keeping requirements are fairly onerous and employers and trustees alike must ensure that they have appropriate systems in place either themselves, or with any service provider they use, to ensure that these requirements are being adhered to and that the records are capable of being produced to the Regulator upon their request.

These stringent requirements add yet another layer of administration and monitoring to the already complex demands of the auto-enrolment legislation. They must be taken seriously and complied with as it is the employer who remains responsible for ensuring their duties are being fulfilled. Where an external service provider is carrying out the work on an employers behalf, the contractual agreements must give the employer sufficient access to methods of recourse against that provider, should the need arise following a breach of the record keeping duties.