You will probably have heard Nick Hewer advertising Workplace Pensions – ‘we’re all in’. The question is; what is it all about?
New legal duties require employers to ‘automatically enrol’ their employees into a pension scheme. Even if you already offer pension arrangements for your employees, you may not have a qualifying scheme in place and you’ll still have new obligations to meet.
For the majority of small businesses the date you have to comply with the new legislation, known as your ‘staging date’ will be somewhere between 1st June 2015 and 1st February 2018.
If you have at least one member of staff who you pay via a PAYE scheme, automatic enrolment duties apply and you will receive documentation from The Pensions Regulator confirming the action you need to take.
If you don’t have any staff other than directors, you may not have any automatic enrolment duties. You won’t have any duties if you are a sole director, or, if there are a number of directors, none of whom has an employment contract. If you receive a letter from the Pension Regulator which includes your staging date and you believe that automatic enrolment duties don’t apply to you, you will need to contact them.
The First Three Steps to Automatic Enrolment
…Know your staging date. This will be provided on the initial documentation received from The Pensions Regulator. You can also find this by following the link on The Pensions Regulator website: www.thepensionsregulator.gov.uk
…Assess the eligibility of your workforce. You must automatically enrol employees who are:
…Between 22 and state pension age
…Earning above £10,000 per annum
Employees that don’t meet the criteria above may also be able to opt in to a pension scheme and you will be obliged to enrol if they ask to be, however, the rules and requirements on contributions will be different and you may not need to make an employers contribution for those people.
…Review your pension arrangements. If you have an existing pension scheme for workers, you may wish to consider enrolling all eligible jobholders into this scheme. To do this, your existing scheme will need to qualify as an automatic enrolment scheme. If you do not have an existing pension scheme or you cannot use your existing pension scheme for automatic enrolment, you will need to choose another pension scheme. In this case, all eligible jobholders will need to be automatically enrolled in your new pension scheme. To assist you with this process, the government has established three schemes – NEST, NOW Pensions and the People’s Pension.
Along with this, you will need to think about the impact it will have on your finances. For automatic enrolment there are minimum contributions you must pay in order to comply with your duties. These are a percentage of earnings and are shown in the table below.
|Employer minimum contribution
|Total minimum contribution
|Employer’s staging date to 30 September 2017
|1 October 2017 to 30 September 2018
|1 October 2018 onwards
Start preparing for automatic enrolment now to avoid missing your staging date and possible fines. For further information, please contact Nigel Atkinson: firstname.lastname@example.org or Clare Walker: email@example.com