Back to basics: So what is auto enrollment exactly?
One of the biggest challenges facing companies this year is workplace pension legislation – otherwise known as auto enrollment. Auto-enrollment will affect many, if not all, businesses in the UK. The government has decided that everyone needs to be saving for retirement and so has introduced a compulsory system, where employees that fall into the right category will automatically start saving into a workplace pension scheme. Previously, opting into a pension was voluntary. Now it is compulsory.
Under the Pensions Act in 2008, every employer in the UK must put certain staff into a pension scheme and contribute towards it.
Large or small and in every industry, if you are a business in the UK that employs even one person, you will need to get involved in Auto Enrollment. If you are a one / two director limited company with no other employees, you can be exempt from Auto Enrollment. Find out more about auto-enrolment exemptions
What do I do first?
1. Firstly, find out your staging date. You can go to the pension’s regulator website at http://www.thepensionsregulator.gov.uk/en/employers and use the link ‘Find your Staging Date’. All you need is your PAYE reference number – if in doubt, ask your accountant or payroll manager for this information. Once you know what your staging date is, you have a deadline to work towards. A word of advice is to be as prepared as possible, so that you’re not panicking at the last minute.
2. Next – decide who your nominated contact is. This should be the person who will be running your payroll/ pension.
3. Give yourself plenty of time. You need to research pensions or speak to an Independent Financial Adviser. This advice can be costly. If your business can’t afford to spend a lot on auto-enrollment, you have the option of registering your business for the NEST pension scheme online, which is currently provided free to employers. Note: your accountant is not able to provide any advice on pensions but they can assist you in setting up the scheme once the employer has made the choice.
4. If you find you are very near your staging date and haven’t put anything in place, you can postpone for up to 3 months to give yourself more time to prepare.
Failure to comply with auto-enrollment or workplace pension legislation does come with consequences, including fines from the pension regulator. For expert advice to make sure your business is compliant, contact us today and let it be one less thing to think about.
Keep an eye out for our next blog which covers the Auto Enrollment Jargon that you need to understand in order to process Auto Enrollment for your business employees.