Pensions law for all UK businesses and organisations has changed and every employer is now required to assist their staff in saving for retirement.
Once they reach the predetermined date all employers not already under Pensions Automatic Enrolment will need to automatically enrol most workers into a pension scheme and both employee and employer will have to contribute towards it.
As an employer you will need to:
• Assess your workforce
• Review your pension arrangements
• Communicate with all of your workers
• Automatically enrol eligible workers into a pension scheme
• Register with The Pensions Regulator
• Keep appropriate records
• Make contributions to your workers’ pensions
In order to avoid duplicated administration and additional cost the auto enrolment process is best carried out at the same time as payroll processing. Otherwise, payroll calculations will have to be run twice – once for the pension provider and once for payroll.
Payplus operates its client’s payrolls using software that also provides for the full auto enrolment management process to be carried out seamlessly alongside the payroll processing.
In addition the Payplus team can advise on Pensions Automatic Enrolment set up and can provide options for pension schemes for your workforce.
When will automatic enrolment have to start?From the start of 2016, according to predetermined staggered start dates, 1.8 million small businesses will have to register for Pensions Automatic Enrolment and use it to provide a pension scheme for their staff.
What is a Staging Date?
The Staging Date is the name given to the start date for a business or organisation to start applying the automatic enrolment legislation. Given that preparations need to be made the Staging Date needs to be known well in advance so that various actions can be carried out from that date.
Does my business have to comply with auto enrolment?
The vast majority of businesses will need to comply but there are some circumstances where the only employees are directors where it can be avoided. A useful tool can be found here to find out if that applies to your business.
Even if you do not need to comply you will still need to contact The Pensions Regulator to get exempted.
Can I put automatic enrolment off at all?
Postponement is the term applying to the method by which employers can delay assessing and enrolling employees. However, it is not a pushing of the Staging Date back and you still need to have everything in place by the Staging Date.
Postponement can be for a maximum of three months, within which time you can select a date to assess an employee; known as a deferral date. Postponement is the only time that you can have some control over the enrolment date and process.
How do I choose a pension scheme?
A pension scheme should be beneficial for both you and your employees. It is an opportunity to use pension contributions as part of a benefits package for your employees and prospective employees, so leading to increased loyalty from your staff.
In order to make the implementation and operation of your chosen pension scheme straightforward you will need to choose one that integrates with your payroll processes.
At Payplus we have links with schemes that do this so that between us and the pension provider virtually all of the administration involved with auto enrolment is removed from you.
In order to find out more get in touch.
Which employees will have to be enrolled?
When you know what your Staging Date is you will need to understand which of your employees this will apply to.
Broadly speaking employees aged between 22 and state pension age and earning over £10,000 will need to be automatically enrolled. There will also be staff aged between 16 and 74 who, while not being eligible to be automatically enrolled, will need the ability to be able to do so if they wish.
What do I need to be telling my staff about automatic enrolment?
Your employees need to be kept informed as to what is being put in place, how the automatic enrolment process works and that they can subsequently opt out if they wish.
The website from The Pensions Regulator gives good guidance on this and provides template letters.
How much will the employers’ pension contributions have to be?Initially the minimum pension contributions required are 1% of pay from both employer and employee. However by the end of 2018 this will have risen to 3% for the employer and 5% for the employee.
Can employees opt out of pension auto enrolment?
Eligible employees have to be automatically enrolled but can then opt out. The employer must explain the processes and obligations, including the opt out option, but must not influence employees in their decision making.
Isn’t this going to mean more administration to deal with?
Yes this is another layer of red tape on businesses and organisations of all sizes. As usual it is likely to have the most pronounced impact on the smaller businesses.
However, as outlined above Payplus can provide a combined payroll and auto enrolment service that will take most of that administrative burden away.