Make sure you’re ready with our 3 step plan!
Unless you’ve been living on Mars for the last couple of years’, you can hardly have missed the public information campaign about pension auto enrolment. By introducing the scheme, The Government hopes to increase the number of people saving into a workplace pension scheme by up to 11 million by 2018.
Operating in addition to the state pension, auto enrolment already affects some larger companies, and it will gradually be applied to all employers meeting certain criteria. If you’re an employer, auto enrolment could have real implications for your business, and if you’ve not done so already, you need to ascertain whether your business is affected by this important change in policy – and if it is, prepare an action plan.
Ignoring auto enrolment could lead to you having to pay back payments, penalties or fines.
Step 1: Check if auto enrolment applies to your business
Auto enrolment only applies to businesses that employ staff, so if you’re a sole trader and don’t have anyone working for you, you won’t be affected – and in certain circumstances, even if you do employ staff, you may not need to take any action. Examples of businesses which are exempt would include a company where the only people on the payroll are owner / directors who don’t have contracts of employment; a one person company using payroll to be tax efficient, or a limited company run by a couple who are both on the payroll, both directors – and neither of whom has a contract of employment.
Step 2: Check which of your staff are eligible and confirm your ‘staging date’
Once you’ve ascertain whether your business comes under the scheme, you will need to work out which of your staff you need to auto enrol. The terms of their contract of employment will determine whether you are legally bound to enrol them, or whether they are entitled to choose if they want to be enrolled.
If you have an employee who is eligible for auto enrolment, you need to confirm your ‘staging date’ with the Pensions Regulator – this is the date by which you have to implement pensions for your eligible staff, and it can vary depending on a range of factors, including – but by no means limited to, the size of your business.
Step 3: Make an action plan
There are lots of things you will need to do in the 12-18 months leading up to your staging date; an action plan will help to keep you on track and check off key tasks along the way.
Things your plan will need to cover include:
Working out your contributions, and considering the financial implications for your business
- Checking your payroll software is capable of managing deductions
- Advising the Pensions Regulator of who in your business will have responsibility for the programme. This will need to be the most senior person in the company, but you can nominate your accountant as a secondary contact
Organising a staged communication plan to make sure your staff are fully aware of the scheme, understand the contributions they – and you – will be making, and the implications it has for them.
What if I already operate a pension scheme?
If you already operate a pension scheme for your staff, you need to check that it is compliant with the type of arrangements under the auto enrolment programme. Not all schemes will satisfy the minimum criteria necessary, and if your existing scheme falls short, you’ll need to take action to bring it in line.
Companies needing to make small increases to their contributions may be able to make use of one of the many standard schemes available, such as NEST or People’s Pension. Businesses with larger headcounts that need to make higher contributions will be in a strong position to negotiate with a pension provider and get some attractive deals to help them make their scheme compliant.
Leave it to Inca Caring Accounting!
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.