Providing an auto enrolment-ready workplace pension scheme is now a legal requirement for any business that’s an employer – find out what auto enrolment is all about here
So, as business owner, what do you have to do to get your company ready for the new workplace pensions rules and ready to run an auto enrolment pension?
- Your staging date:
Your ‘staging date’ is the date by which your pension scheme must be up and running. You’ll have been sent a letter from The Pensions Regulator (tPR) telling you the date for your business.
You can also find out your staging date on the tPR site here, using your PAYE reference
It’s possible to postpone your staging date by up to three months if needs be, but you should aim to meet this deadline as penalties will apply if you’re late.
- Decide on a pension provider:
The next step is to decide which pension provider you’d like to use for your workplace pension – assuming you don’t already have a scheme that complies with the auto-enrolment requirements.
To qualify as being suitable for auto-enrolment, your workplace pension must:
- Be registered with The Pensions Regulator for auto-enrolment
- Enrol all eligible employees without requiring them to make any choices prior to joining
- Contain a default investment fund
- As a minimum, apply contributions to any employee earnings between £5,824 and £43,000 in the 2016/17 tax year
- Minimum contributions are being increased gradually over time as follows:
- Assess your employees for eligibility:
Once you’ve decided on a provider, the next thing to do is assess your staff for eligibility.
This isn’t just a one-off requirement: you need to review your workforce on a monthly basis to make sure everyone who’s currently eligible has been enrolled. Take a look at the table below to see if your employees are eligible:
Annual Salary |
Age |
||
16 to 21 |
22 to state pension age (SPA) |
SPA to 74 |
|
Below £5,824 |
Entitled worker Must be enrolled if they ask. You’re not obliged to contribute to their pension pot (but you can if you want) |
||
Over £5,824 but no more than £10,000 |
Non-eligible jobholder Must be enrolled if they ask. You must contribute to their pension pot. |
||
£10,000 and over |
Non-eligible jobholder |
Eligible jobholder Must be automatically enrolled. You must contribute to their pension pot. |
Non-eligible jobholder |
This table is accurate for the 2016/17 tax year
You also need to manage any employees who want to opt in, or opt out, of the scheme and enrol any new joiners coming into the business.
- Communicate all the changes to your team:
Your employees need to understand auto enrolment too. And that means you communicating the reasons for the changes in workplace pensions, and what you’re doing to set up a scheme.
They need to know which scheme you’re going to opt for and why there will be deductions coming out of their wages each month to contribute to their pension.
- Get your systems set up for auto enrolment and record keeping:
To monitor all your employees, review their eligibility and record all the records needed by law, you’re going to need a payroll system and HR software that’s up to the job.
Xero online accounting includes a payroll function as standard. This can handle your auto enrolment needs and talk to your other systems to make contributions and record all your employee details over time.
If you’re already on Xero, there are plans to integrate with Systemsync and their Pensionsync platform to enable seamless data exchange with your pension fund.
The auto enrolment headache
Meeting all five of these requirements is a tall order for most small businesses – it’s going to take time, money and effort to get your scheme up and running by your staging date (and time is running out fast if you’ve not already started). And the work doesn’t stop once the scheme is up and running – there’s ongoing monthly admin to carry out too.
There’s real value in working with your accountant and business adviser to outsource the auto enrolment process.
If you need help with your auto enrolment responsibilities, give us a call on 01454 300 999, or drop an email to info@fd-works.co.uk