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Attention! Your business needs to know about auto enrolment
There is great change afoot, with the Government making automatic enrolment for pensions compulsory for employers. Businesses must take note of this – not just because it’s a duty every company is required to fulfil, but because it will affect the way you run your business.
But, never fear – you will find everything you need to know about auto-enrolment and what it means for you right here. At Companies MadeSimple we aim to provide you with all you need to grow a great business more effectively – so let’s explore auto-enrolment in a bit more detail.
What Does ‘Automatic Enrolment’ Mean Exactly?
The government has introduced compulsory enrolment for employees into a pension scheme. Essentially this means that employers and employees will contribute a portion of wages to a savings pot.
The scheme is known as ‘automatic enrolment’ and works like this:
- Employers and employees must pay in – the government adds a little bit through tax relief too.
- Employees must be enrolled by employers so long as they are between 22 and State Pension age. Remember there is the option for employees to opt-out should they wish.
- Eligible employees must be earning over £10,000 per year and work within the UK.
Those are the basics. But how do you set this up and get your business in line with the latest regulations?
When Do I Roll This Out Across My Business?
The bigger companies have already been made to comply with the new regulations, and there are various deadlines known as ‘staging dates’ that serve as deadlines for your company to start implementing these changes.
The regulator for this scheme, The Pensions Regulator, have a little tool for finding out your staging date which is quite handy if you’re not sure.
What If I Don’t Do This?
There are some important consequences to not complying with the new regulations, they come in the form of penalties. The Pensions Regulator will impose penalties on any non-compliant businesses.
The main points about the potential penalties are:
- Informal Action – The regulators will issue guidance and instruction by phone, email, letter or in person – this includes things like warning letters.
- Fines – The most immediate form of penalty is a fine, these have considerable range. They can vary from a £400 flat fee, a £50 a day fine or even a £10,000 a day fine. It’s clearly wise to avoid these wherever possible.
- Imprisonment – There is a possibility of imprisonment for up to 2 years for non-compliance with the new regulations.
The potential consequences for not setting up with the new regulations are many, so it’s essential that all businesses comply with this.
Okay – So How Do I Do Set Up Auto Enrolment?
Setting your employees up on the new scheme can be done in a number of ways. The first thing to do is find your staging date from The Pensions Regulator – this will give you the deadline you must be prepared for.
Recent deadlines include June 1st 2015 – at which time companies with under 50 employees had to start complying, and there are several more staging dates coming up in July and August.
To make sure you are compliant, there are numerous things to do. Remember to be in keeping with the requirement you should be set up correctly, be set up on time and remain compliant as time goes on. You can do this in the following ways:
- Use An Auto Enrolment Service – There are several free enrolment services such as the Smart Pension service which can greatly simplify the process and provide a web based management platform that integrates with your payroll provider.
- Use An Accountant – If you have an accountant or finance department within your business, you can make use of them to manage the process of auto enrolment and monitor compliance, you can also pay for external advice and support from accountants if you don’t have one.
- Do It Yourself – It’s possible to manage auto enrolment yourself. This may be a good option for companies with just a few members of staff. However the amount of work involved should not be underestimated as it can be fairly complicated for businesses with significant amounts of employees. If you decide to do it yourself, The Pensions Regulator provide ‘Your step-by-step guide to automatic enrolment’ which is very handy.
Whatever way you do it – it’s important that you do it properly and on time. The administration time of compliance is often a step too far for some businesses but it’s necessary to do anyway, so this might affect what approach you can take as a business.
Compliance + Auto-Enrolment = Better Business & Employees
The idea behind auto enrolment is making a better business, both for you and your employees. Pensions give employees the option for better control of how their wages work for them, and that makes for a healthier work environment – and ultimately a better business overall.
Smart Pension Resources
We’ve teamed up with Smart Pension who have created a number of different resources designed to ensure that your business is ready:
- Auto Enrolment Penalties Explained
- Deadlines & Staging Dates for WorkPlace Pensions
- Create your Smart Pension now
At Companies MadeSimple we always want to be there to lend a helping business hand, and you can get yourself much better prepared for the prospects of auto enrolment with the handy explanations provided above.
Thanks for reading. Did you find this useful? If so, please comment and let us know. Also, make sure you ask any questions you might have here and we will do our best to get back to you. See the rest of our blog for more great information.