You can’t have failed to see the news and read the articles about pension auto enrolment over the past few years. And now, as the roll-out reaches its end, it’s time for the last remaining employers to jump on board.
Currently all firms with over 50 people must auto enrol all employees aged over 22 who earn more than £10,000 a year. And by February 2018 all smaller businesses will also have to comply. If your business has between 1 and 10 employees it’s likely that your staging date is fast approaching.
In case you need reminding, auto enrolment is a government initiative to help more people save for later life. In the past, many workers missed out on the benefit of a pension either because their employer did not offer one or because they had failed to join their company’s scheme. Under the government initiative, all employers are required to enrol eligible employees into a workplace pension scheme before their given auto-enrolment staging date.
As part of the initiative there are minimum level of contributions that you will need to make to your employees’ pension and these will gradually increase over time. You can of course contribute more than the minimum but you must, at the very least, meet these guidelines:
|Date||Employers minimum contribution||Total minimum contribution (employer+employee)|
|Up to 30th September 2017||1%||2%|
|1st October 2017 – 30th September 2018||2%||5%|
|1st October 2018 onwards||3%||8%|
So now we’ve recapped on the basics of auto enrolment let’s take a look at what you need to do next:
1. Find out when your staging date is
Check the Pension Regulators website here.
2. Decide if you want to use a financial advisor to help you get your scheme in place
You will need to understand and agree which tasks you and they are doing so that nothing is missed so make sure you agree that (and the costs) upfront.
3. Choose the right pension provider
The sooner you can make the decision as to which provider to go with, the better. More than one million businesses will need to meet their automatic enrolment duties in 2017. This means that pension providers will be swamped with new company pension scheme applications. In addition, selecting your provider now will leave you with plenty of time to focus on communications and making sure you are prepared for launch. There are some pension schemes aimed at SMEs that do not have set up costs or monthly charges for automatic enrolment, while other schemes may charge so make sure that you shop around. Remember to ask the provider what they will charge you based on how many staff you have. The National Employment Savings Trust (NEST) is a pension scheme provider that has been set up by the government and must accept all employers that apply to use it for automatic enrolment. They do not have a set-up charge so you can contact them if you do chose to set up the scheme yourself.
4. Engage your staff in your new workplace pension
You should start to consider how you will engage your staff when it comes to your workplace pension. The law states that an employer only needs to send out one piece of communication, but be cautious. Sending out limited information to your employees will more than likely mean that you are inundated with questions from your employees. Our advice is to do a little extra when it comes to communication and educate your staff in advance. Let them know that you too are contributing to their pension and playing your part.
Once you have set up your workplace pension you will need to complete and submit a Declaration of Compliance form (this can be done online). This form will let The Pensions Regulator know that you have met your legal duties for automatic enrolment. If you are using a 3rd party to help you set up your workplace pension they will often complete this part of the process on your behalf.
So, start to think about automatic enrolment sooner rather than later and don’t delay it. Remember that you don’t have to wait until your staging date and could set up your pension scheme early.
For help and support with your company’s auto enrolment contact us at theHRhub for a chat about your requirements. Drop us a line at email@example.com or call us on 0203 627 7048.