Pensions Auto-enrolment – are you ready?

13
Nov

Pensions Auto-enrolment – are you ready?

The government started pension auto-enrolment in 2012 and is set to continue over the next six years. In 2018 every employer, regardless of the number of employees, will have to offer a workplace pension that complies with the government rules.

Having spoken with Independent Financial Advisors who are assisting employers to set up a new scheme from scratch it is taking up to a year to get everything in place for auto-enrolment.

So what should you do now to ensure your business is ready?

Know your staging date:

  • Staging dates depend on the number of employees you have on your payroll.
  • Enter your PAYE reference into the Pensions Regulator’s staging date tool to find your staging date www.thepensionsregulator.gov.uk

Know your workforce:

  • Employees aged 22 to 65 and earning more than £9,440pa must be automatically enrolled into a workplace pension scheme unless they expressly opt out.
  • Employees aged 16 to 74, earning between £5,668 and £9,440 pa have the right to opt into your pension scheme.
  • Those aged 16 to 74 earning up to £5,668 have the right to join a pension scheme after your staging date.

Understand the costs:

  • It takes time to gather data and prepare for auto-enrolment; do you have the staff to take this on?
  • Does your current payroll software?
  • Your pension scheme must comply with government rules; if you have a pension scheme already get it reviewed to ensure compliance.
  • Once the scheme is set up your minimum employer contribution will be up to 3% of the employee’s annual salary.

Take expert advice:

  • To set up a pension scheme you need to take expert advice. A good Independent Financial Advisor will guide you through introducing a pension scheme, but there is only so much they can do, you really need one person responsible for ensuring the IFA is updated.
  • Do not assume that your payroll provider will tell you what needs to happen. It is your responsibility to ensure you have a compliant pension scheme in place by your staging date.

Know the risks:

Companies that have failed to comply so far have fixed penalty fines from the Pensions Regulator and a daily penalty of between £50 and £10,000 depending on the number of employees affected.

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