Back in July, we blogged about pension Auto Enrolment, asking if your business is fully prepared for the introduction of the Government’s new scheme.

This scheme is designed to invigorate pension saving in the UK and increase the number of employees saving into a workplace pension. Auto Enrolment is an obligation on all employers to enrol eligible jobholders into a Workplace Pension Scheme unless they are already a member of a Qualifying scheme. Operating in addition to the state pension, the rollout of Auto Enrolment has already begun, and will eventually be applied to all businesses meeting certain criteria.

With the reality of Auto Enrolment drawing closer for small businesses, we receive many queries on the topic from business owners, and thought we’d take the opportunity to put some of the most frequently asked questions to financial adviser and pension expert, Tom Frizzell.

Q1: If I’m the only person in the business do I need to register?

If you’re the sole director in the company and have no entitled or eligible job holders, then you will not need to set up an Auto Enrolment scheme for your company. However, you will still need to communicate with The Pensions Regulator to confirm that your company will not be participating in Auto Enrolment for this reason.
Q2: Should I set up an Auto Enrolment scheme anyway?

If your business has no plans to take on any employees in the future then there is no reason to set up an Auto Enrolment scheme. If however, you have short-term plans to expand your business and take on staff, you should look to set up an Auto Enrolment scheme ready for when these new employees join.
Q3: What’s the difference between a workplace pension and a standard pension?

All Auto Enrolment schemes must meet the charges cap of 0.75% and offer a default fund as well as being able to automatically enrol new members. Workplace scheme such as NEST, NOW and The Peoples Pension all meet these criteria.

A standard pension will need to be reviewed to check that it meets with the qualifying criteria for Auto Enrolment. Some qualifying pensions may give access to more adventurous fund choices – but could well be more expensive than a workplace scheme.
Q4: I already have a pension scheme in place, do I need to change?

If the scheme meets the qualifying criteria (as mentioned above) then you will be able to use it. If it does not, you will need to check with the provider whether they are able to make the scheme qualify. If this is not possible, you will need to find a new pension into which you can enrol your employees.
Q5: What choices exist for my staff?

All eligible job holders will be automatically enrolled into the scheme – they then have the choice to opt out of the scheme. Generally a company will only set up one Auto Enrolment scheme, so for most employees there will not be any choice of pension scheme. Some providers may allow an employee to opt out of the Auto Enrolment scheme and make contributions to a non-qualifying scheme – providing the employer is willing to redirect their contributions. However, it is important that the same level of contribution is being offered for both schemes so as not to be offering an incentive to opt out. You should also be aware that those employees who do opt out of the Auto Enrolment scheme will be automatically re-enrolled every three years.

Leave It to Inca!

Find out how your business is affected

From just £49 (+ VAT)

Auto Enrolment is a complex area, but Inca can help you to determine if it applies to your business and, if so, who in your company is affected, your staging date, and when you need to start your action plan. We are offering this service to Inca clients from just £49 + VAT – a small price to pay for understanding exactly what impact Auto Enrolment will have on your business, and far more preferable to back payments, penalties and fines.

Call us now for an informal chat!

Any other questions about pensions?

If you have any questions relating to pensions, please let us know and we can put you in touch with a trusted Wealth Manager.

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Auto Enrolment: 6 Key Questions Answered

Back in July, we blogged about pension Auto Enrolment, asking if your business is fully prepared for the introduction of the Government’s new scheme.

Q1: If I’m the only person in the business do I need to register?

Q2: Should I set up an Auto Enrolment scheme anyway?

Q3: What’s the difference between a workplace pension and a standard pension?

Q4: I already have a pension scheme in place, do I need to change?

Q5: What choices exist for my staff?