The law on workplace pensions has changed. Whether you’re a hairdresser, an architect or you employ a personal care assistant or a nanny, if you employ just one person, then you are an employer and have new duties under pensions law.
Automatic enrolment means that employers must put certain staff into a pension scheme and pay into it. So it’s important that you recognise what you need to do and by when, in order to comply with the specific duties you have as an employer.
You may have noticed the blue monster named Workie appearing on TV ads and bus stops lately, and there is a reason you’re seeing him around a lot more. During 2016, an estimated 500,000 employers are due to comply with the new regulations.
In the three months to March alone, an average of over 1,200 employers will stage every day.
If you’re an employer, you need to take action now. It doesn’t take long to ensure your business is compliant. The pensions market will be overwhelmed with enquiries and you must make sure you don’t get left behind.
Exceptions: Director-only companies
If you don’t have any staff other than directors, you may not have any automatic enrolment duties. See this Q&A we wrote entitled ‘Q&A: Director-only companies and Auto Enrolment’. But director-only companies aside, there are very few exceptions to the regulations.
Preparing for auto enrolment – 5 steps
If you’re an employer and you’ve yet to start looking at your duties, there are 5 essential steps you need to take:
Step 1 - Know when it applies to you
The date that the new law applies to your business is known as your 'staging date'. This date is determined by the number of staff on your payroll and your PAYE reference.
Find out your staging date now, visit The Pensions Regulator website here
Step 2 - Nominate a contact
If you haven’t already done so, you should confirm who the employer/ owner /most senior person in the business is as they are responsible for making sure the duties are met.
They will be sent letters to keep them up to date with the tasks they need to complete and by when. You may also appoint a secondary contact like your accountant or payroll bureau, but don’t forget to ask their permission.
To nominate a contact now, go to The Pensions Regulator website click here
Step 3 - Assess your workforce
Some workers will automatically need to be enrolled in a pension scheme and they’re known as ‘eligible jobholders’. You must automatically enrol eligible jobholders into a qualifying pension scheme and make contributions on their behalf to that pension scheme.
Workers who are not eligible jobholders will still have a right to opt into a pension scheme or a right to join one.
You will have to perform an assessment at your staging date to categorise your staff into these groups. But running a preliminary assessment in advance is useful because it gives you a rough guide of how many employees may be in the pension scheme.
Step 4 - Choose the pension scheme
1. Review your existing pension scheme - If you have an existing pension scheme for your 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.
2. Choosing a qualifying pension scheme - If you need to select a qualifying pension scheme, you can choose from a number of pension providers. The Pensions Regulator has a page entitled Choose a pension scheme or check your existing one on their website to help employer’s make their choice.
Step 5 - Systems
If you outsource your payroll to your accountant or a payroll bureau, they should be able to manage the day-to-day the pension scheme for you but you need to confirm this with them.
If you manage your payroll in-house, you may need to pay for some training on auto enrolment for your payroll clerk and you will need to check that your payroll software is equipped to deal with auto enrolment.
Help is at Hand
Wren Sterling, a national firm of independent financial advisers, can offer all businesses a qualifying workplace pension scheme, including a master trust which is currently available at an exclusive discount for new or existing clients of TaxAssist Accountants.
Your local TaxAssist Accountant can also help with the day-to-day running of the scheme, to ensure you comply with the workplace pension laws and leaving you to concentrate on growing your business. For more information about the services from Wren Sterling or your local TaxAssist Accountant, please contact us for more information.