The UK government has changed its rules on workplace pensions. It’s called automatic enrollment, and employers with at least one member of staff are now legally obliged to make sure that they enrol staff on a workplace pension scheme and contribute towards it. The aim of automatic enrollment is to ensure that workers have sufficient funds in place for when they retire.
There are many rules regarding automatic enrollment, and for small businesses in particular it can be confusing knowing what is involved. Here is a general breakdown of what you need to know.
According to the Pensions Regulator, you should allow up to 12 months to prepare for automatic enrollment. It is a legal duty, and if you don’t act you could be fined.
Automatic enrollment will take place over a period of a few years, but it is important to know when you will be legally required to fulfil your enrollment duties. This is known as your staging date. Your staging date is governed by the number of employees you have and your PAYE reference number. For those businesses not paying staff with a PAYE system, the staging date will be 1 April, 2017.
Carry Out an Assessment
You will need to decide who in your business is responsible for automatic enrollment, and also assess which staff you will need to enrol. This is based on the age of a worker, how much they earn and whether they have a contract with you.
A point of contact for managing automatic enrollment in your business should be provided 12 months prior to your staging date, and an assessment of eligible staff approximately nine months beforehand.
Create an Action Plan
Around nine months before your staging date, you should make a plan of your automatic enrollment responsibilities and duties. If you leave it too late, it could cause you more expense and create complications.
According to the Independent, one in five small employers doesn’t even know when they’re supposed to be compliant, so if you are unsure what you are doing and when it needs to be done by, speak to an expert pension small business provider. Professional pensions for small companies providers can help you with automatic enrollment tasks, including the provision of easy-to-use online systems.
You will need to work out how much it will cost to contribute towards a pension scheme. The sooner you do this, the easier it will be to plan your finances accordingly.
Records and Payroll
Make sure staff records are up to date and that you have payroll software that is compliant with automatic enrollment.
Deciding on a Pension Scheme
If you already have a pension scheme in place, check to see if it is compliant with automatic enrollment. If it does not qualify, then you will need to select a scheme that does. Spend some time making sure you pick the right scheme for your business.
If you have not done so already, make sure that your staff are fully aware of what automatic enrollment is all about and how it will affect them.
Declaration of Compliance
A declaration of compliance will need to be completed to show that you have legally complied with the duties of automatic enrollment. A declaration of compliance needs to be with the regulator no later than five months after the staging date.
Once your staff are enrolled in a pension scheme, you will have ongoing legal responsibilities, such as paying contributions, keeping records and reviewing who is eligible to join the scheme.