Workplace pension law has changed. Every employer in the UK will eventually be required to help their workers to save for their retirement. Employers will need to automatically enrol certain workers into a pension scheme and contribute towards it.
In very simplistic terms all of your existing employees and any new employee will be required to be a member of a compliant pension scheme, the employer must also contribute. There are exceptions based upon age and how much your employee is paid. An employee can opt-out from the pension scheme. Please be aware however that this is a very simplistic view of Auto-Enrolment and in practice it is more complex.
When will this affect me? – Staging Dates
All organisations have a staging date for when they need to be ready for Auto-Enrolment. The staging date is dependent on what the size of your organisation was in April 2012. The Pensions Regulator should send you a letter approximately 1 year ahead of your staging date.
To establish the staging date for your organisation please visit (please see the front of your payroll reports for your organisation’s PAYE reference):
http://www.thepensionsregulator.gov.uk/employers/tools/staging-date.aspx
Once you know your organisation’s staging date it is then time to start preparing for Auto-Enrolment.
How should I prepare for Auto-Enrolment
The process of Auto-Enrolment is complex and as such there is a great deal of information available via The Pensions Regulator website (http://www.thepensionsregulator.gov.uk). If you already have a pension provider consider discussing Auto-Enrolment with them, or you may consider it appropriate to appoint an external pensions administrator to assist your organisation with administrative requirements of Auto-Enrolment.
From our experience, so far, it is best to prepare for Auto-Enrolment as soon as possible. We have been led to believe that organisations are finding it difficult to identify a pension company that is willing to assist with Auto-Enrolment if the staging date is imminent.
Payroll Options can assist by providing information to allow you, or your pension administrator, to evaluate your existing employees for Auto-Enrolment. Once your scheme is operating we will enrol your employees and opt-out as instructed with your normal payroll instructions. A pension report will detail the amount of contributions made and will be supplied with your normal payroll reports.
Will this cost my organisation money?
Inevitably Auto-Enrolment will add additional costs to your organisation, initially for the administration of the pension scheme but primarily in the contributions that the employer must make towards an employee’s pension.
What should I do now?
- Establish your organisation’s staging date
- Decide whether to appoint an external pension administrator
- Assess existing employees for Auto-Enrolment.
Please remember Auto-Enrolment is not something that can be ignored – start your preparations now.
