Auto-enrolment pension arrangements – Are yours sorted?
Have you reached your staging date for your auto-enrolment pension yet? I speak to lots of employers and find that some of the smaller ones in particular have been putting it off. However, this is not a good idea for three very important reasons:
• It takes much longer than you may think to put a scheme into place. The staging date is the date it has to be operational and registered with the Pensions Regulator – not the date you start to contact a provider. Ideally you should start the process at least 6 months before your staging date.
• If you leave it too late, you will find that not many providers will be interested in giving you a quote – particularly if you are a small employer. You will be limited in your choice and will not be able to shop around for the best value schemes.
• If you are thinking about pay increases now for your employees, it will be even more costly when you get to putting in place an auto-enrolment pension because you will have to factor in the additional employer contributions on top of the pay increases. It would be better to put in place the pension scheme earlier instead as an employee benefit and would save your company money.
All employers who have at least one employee in addition to a director are required to have an auto-enrolment pension scheme in place – even if those employees are not currently eligible. If you don’t comply with the regulations and are sent penalty notices by the Pensions Regulator these start at £400 and then can increase at a rate of between £50 to £10,000 per day depending on the number of staff employed.
However, just getting a pension scheme up and running is only the beginning. Employers are responsible for monitoring each payroll to check for employees who may become eligible because of age changes, pay increases (including overtime) etc. and monitor and re-enrol any employee who has opted out 3 years previously. This is in addition to making required reports to the Pensions Regulator.
This is a lot of work for already busy employers. In some cases you may have outsourced to your payroll provider, but if you are worried about their compliance on your behalf or are finding you have a provider who is not good at the administration you may need another solution.
Cherington HR has found a supplier set up specifically to enable SMEs to provide their employees with modern cost-effective benefits. It has a 5-star Defaqto-rated purpose-built flexible workplace pension scheme and can undertake all the administrative work associated with running a pension scheme. They can even work in collaboration with your accountants or payroll providers if you have outsourced that. They are very hands-on and practical. They deal with all the employee communications and have a local adviser who can come and talk to you and your staff.
So if you haven’t yet started putting your pension in place, or would like more details about employers’ auto-enrolment responsibilities or have a query about the process, please get in touch today.
Posted on 27 Apr 2017