Pension
auto-enrolment started a year ago and over 1,600,000 have been enrolled, with
about one in ten opted out. If you have eligible employees, by now you should
be well into your planning for this in your business.
Who Will Qualify?
To
be eligible, employees should be at least 22 years of age and under the State
Pension age. They should also be earning more than £9,440 a year from your
employment working in the UK. This figure is the current level of the income
tax personal allowance and may be subject to change. Other staff may be
eligible to opt-in or to join. All businesses which, according to HMRC, had
eligible employees at April 2012 have been allocated staging dates by which
they must comply. These dates depend on the size of their payroll, but all
employees should have been auto-enrolled by 2019. If you don’t know your
staging you can find it by entering your PAYE number on the Pensions Regulator
website.
Within
four months of your staging date, you must have enrolled your eligible
jobholders and registered your scheme online at autoenrol.tpr.gov.uk. The
Pensions Regulator website gives a detailed list of all the information
required at the time. You must also inform other staff of their options to
opt-in or join.
Even
if you currently have no eligible employees to enrol, if you have been given a
staging date, you must register. That means you must have a qualifying pension
scheme in place. The National Employment Savings Trust has a public service
obligation which means it must accept all applications from employers, but many
other pension providers will also qualify. To save yourself a lot of time and
aggravation, you could ask your outsourced
bookkeepers for some help with all this.
Budgeting for the
Extra Expenses
Once
you have completed your enrolments you have to pay at least the minimum
contributions, which will start at 1% of the employee’s wage and increase over
time to 3%. Depending on the number of employees, this could add up to a
significant extra financial burden, so it is important to budget for it, and
for all the other associated administrative expenses. Of course the employees’
contributions will have to be included as deductions on your payroll. It will
be really important to have up to date software for payroll administration, and
to have the right systems and procedures in place for these new regulations.
Again you may need to look to your outsourced
bookkeepers for assistance.
Make
sure you don’t fall foul of the Pensions Regulator which has already opened
investigations into possible non-compliance in over 80 cases, has been issuing
warning notices and its first non-compliance notification over a failure to
register. The penalties imposed can be very costly to those businesses
concerned.
