Auto enrolment (AE) and workplace pensions
Are you still one of the small business owners still to set up a scheme under the new rules?
The law on workplace pensions has changed. Under the Pensions Act 2008, every employer in the UK must put certain staff into a pension scheme and contribute towards it. This is called Automatic Enrolment. If you need help or an information pack go to the Enquire now or at bottom of this article, but read on in the meantime…
You could be a café, hairdresser, accountant or gallery, if you employ at least one person you are an employer and you have certain legal duties you must follow and abide with.
Workplace Pensions (company schemes) is nothing new, but the Auto Enrolment legislation requires that all employers must provide one for their “qualifying” staff, is. The responsibility for selecting and setting up a Workplace Pension rests with the employer.
All Workplace Pensions that are used for Auto Enrolment, must:
• Be open to all employees without the need for any employee to complete an application, sign any forms or provide any information
• Meet strict rules on charges
• Offer a default investment fund that is suitable for all
• Offer additional investment options for those that want them
• And be a registered pension scheme with HMRC
Below are the key steps you should follow:-
First – Know your Staging Date
Each employer will be given a date by which they must comply with AE rules. This is the Staging Date. To check a staging date there is only one place to go:
The above link will tell you officially when you must comply.
If you need to enrol in 2017 it takes time to set up, so you should get moving on this now…
Second – Check all your Duties and Responsibilities
If you want to check what you must do and by when complete the Duties Checker process.
Third – Choose a Pension Scheme
The workplace pension you select is important and there are many schemes to choose from including NEST, the workplace pension set up by the government. Remember, you might have to justify to your employees why you selected a particular scheme.
Fourth – Work out who is eligible to go into the pension
This is often done via payroll software. Check that the software you use will do this. If you outsource your payroll you need to check with whoever runs your payroll.
You must automatically enrol all staff that:
• are aged between 22 and State Pension age
• earn more than £10,000 a year
• work in the UK
Fifth – Write to or email your staff
All employers must send a letter or email to all their staff to explain about Auto Enrolment, how it impacts on each employee and confirm details of the pension scheme itself. Payroll can often do this for you. But if your payroll can’t do this, there are other options.
Sixth – Tell the Regulator you have complied with the rules
Once you have completed your scheme set up and all eligible employees have been enrolled, it is important to tell the Regulator this. You have up to 5 months from your Staging date to do this.
Remember, AE is a legal duty and if you don’t act correctly you can be fined. The Regulator may impose fines ranging from a £400 fixed penalty to a varying daily escalating penalty from £50 to £10,000.
Automatic enrolment duties do not apply when a company or individual are not considered an employer. For example, you may no longer employ any staff, you have ceased trading, or you’re the director of a company with no other employees.
Let the Regulator know you’re not an employer