Auto-Enrolment – Are You Ready For It?
It has been hard to miss all the recent coverage about auto-enrolment for employers. The new law means that every employer must automatically enrol workers into a workplace pension scheme on their ‘staging date,’ if they:
- are aged between 22 and State Pension age
- earn more than £9,440 a year
- work in the UK
To find out your staging date follow this link (you will need your PAYE reference number handy!). Generally speaking, for employers with less than 30 employees, or for new employers, your staging date will be between 1st November 2015 to 1st February 2018.
Although you might sigh with relief that your staging date is far off in the distance, it will still take a while to get prepared. By starting to plan now, employers can budget, mitigate the costs and cause as minimal disruption to the business as possible.
If you already have an existing pension scheme open, do not assume that the scheme will pass as a qualifying scheme. It must be reviewed to ensure that it meets certain criteria.
How much will I have to contribute?
You will have to pay a minimum employer contribution for everyone you automatically enrol and anyone who opts in. The minimum amount is to be phased in, starting at 1% and rising to 3% of the employee’s qualifying earnings.
Setting up a pension scheme
If you don’t have a pension scheme, or don’t want to use an existing scheme, you’ll need to find a provider that can offer an automatic enrolment scheme. You need to ensure the scheme meets certain legal requirements. You could speak to an independent financial adviser or employee benefit consultant about finding a provider.
There are a number of pension scheme providers including the National Employment Savings Trust (NEST) established by the Government. NEST has a public service obligation to accept all employers that apply to join it. The Association of British Insurers has a list of ABI members providing qualifying automatic enrolment schemes.
When you’ve chosen a provider, you’ll need to work with them to get your scheme up and running in plenty of time for your staging date.
Should you have any queries regarding auto-enrolment please contact Green & Co for further advice.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.