You may be aware that workplace pensions are changing!
Auto-enrolment legislation is now affecting greater numbers of employers; and over the next few years, all employers will need to:
- Automatically enrol eligible staff into a qualifying workplace pension scheme.
- Make mandatory employer and employee contributions to that scheme.
- Register with the Pensions Regulator.
- Provide employees with information about the new legislation and how they will be affected.
- Constantly review their workforce to ensure on-going compliance with the regulations.
When are these changes happening?
Compliance with the new duties started with the UK’s largest employers in 2012; and is being rolled out to cover all employers over a number of years. Every employer will be allocated a date from when the duties will first apply to them, known as their “Staging Date”. All firms will reach their Staging Date by 2018, although the legislation will impact upon all but the smallest firms by October 2015.
You can check your Staging Date on the Pension Regulator’s website.
Once you know your Staging Date, don’t delay – the Regulator recommends that you start to plan for auto-enrolment within your business at least 12 months before your Staging Date; and after all, there is no downside to being ready as soon as possible!
What are the employers’ duties?
Full details can be found here; but very briefly, the employer’s duties are:
1. Assess your workforce
Employees will fall into one of 3 categories:
- Eligible jobholders
- Non-eligible jobholders
- Entitled workers
You must be familiar with these definitions and evaluate which category each of your employees falls into. You must also ensure that you know what your specific duties are for each individual.
2. Choose a suitable pension scheme
The selection of the right scheme and provider is crucial. There are many providers, offering different types of schemes; and you should undergo a proper selection process before deciding which is most appropriate for your business and for your employees. If you already operate a scheme, you need to ensure that it meets the requirements of the new legislation.
3. Register with the Pensions Regulator
You must confirm that you are operating a suitable scheme and following all the required procedures.
4. Make the required level of contributions
“Eligible Jobholders” must be automatically enrolled into your chosen pension scheme, with minimum contributions being paid by both the members and the employer. There are different options for calculating the minimum contribution levels and it is important to select the most appropriate option for your business.
5. Process any opt-out notices
Although enrolment to a scheme will be mandatory, employees will then have the right to opt-out of the scheme if they wish.
6. Process any opt-in or joining requests
- “Non-eligible jobholders” do not need to be auto-enrolled, but may opt-in to the scheme if they wish to. The minimum level of contributions must be paid for these members.
- “Entitled workers” may choose to join the scheme and you must process their contributions for them. There are no minimum contribution requirements for entitled workers.
7. Avoid inducements to opt-out of the scheme
Workers must not be put under pressure or offered inducements to opt-out of the scheme.
8. Keep accurate records
You must keep specific records about your workers and the operation of your pension scheme, usually for a minimum of 6 years.
9. Provide employees with information about the changes
Employees must be informed about the new legislation and how it relates specifically to them. It is your responsibility to provide the right information, to the right individual at the right time.
Don’t worry – we can help!
The employer has the ultimate responsibility for compliance with the regulations. It is not a simple process to deal with auto-enrolment properly and many employers feel that the legislation is too complex or time-consuming to handle internally.
Our pension solution has been designed for those employers who do want outside help in order to implement the legislation effectively, but who also wish to keep their costs under control.
- We have a workplace pension scheme that is suitable for all employers and employees.
- We have the experience & resource to help implement the legislation effectively.
- We have systems & software that will reduce on-going administration costs.
- We can work with accountants and other advisers to provide a complete solution.