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.Find out more following this link to Google+