With effect from 1 June 2015, small businesses employing fewer than 30 staff became bound by the requirements of the new pension auto-enrolment regime, obliging them to automatically enrol all eligible employees into a qualifying pension scheme and to make a minimum contribution to that scheme.
The Pensions Regulator recently warned that even those who employ a single care worker, such as a carer or nanny, must comply with the auto-enrolment regulations, with very few exceptions.
Under auto-enrolment, employees over the age of 22 and earning more than £10,000 per annum now have the right to belong to a workplace pension scheme, unless they choose to opt out.
Over five million workers in larger companies are already in the scheme, and an estimated 3.8 million workers are expected to be enrolled by smaller employers between now and 2018.
According to recent research, one in four small businesses is as yet unprepared for auto-enrolment. Business owners are being urged to ensure that they are prepared for the new regulations. Employers who fail to comply could be liable to enforcement action and/or a penalty.
Auto-enrolment set-up can be a long and confusing process. To help get you started we’ve produced a handy checklist explaining the steps you’ll need to take. For a more detailed plan tailored to your business, be sure to contact us.
How will you adapt your existing administration and payroll systems to accommodate the changes? Additional laws and more processes will undoubtedly put extra pressure on current systems. Could you benefit from additional payroll support?
Who will take responsibility for the set-up of auto-enrolment?
You will need to identify all eligible jobholders working for you. You will also need to consider whether you have an employer duty in relation to other types of workers including non-eligible jobholders and entitled workers.
Decide on the type of pension scheme you will offer. Do you have an existing scheme that meets (or can be changed to meet) the Government’s requirements, or will you need to set up a new one? You may also want to consider whether the new NEST scheme would suit your needs.
You can find out your staging date by clicking here. Create a dated plan of when you will complete each stage of the checklist. Alternatively, as a Stipendia client you can ask your dedicated team member to create one for you.
All employers will need to register with the Pensions Regulator within five months of their staging date.
You are required by law to write to all employees, informing them of auto-enrolment and what it means to them.
Make arrangements to achieve active pension membership for the eligible jobholders.
From October 2018 all employers will need to contribute at least 3% of the qualifying pensionable earnings for eligible jobholders. Employers are also required to make contributions for non-eligible jobholders who choose to opt in to the pension scheme.
It is important for employers to keep track of their employees’ ages and earnings as some members of staff may move between the different categories of worker. This is especially important for workers who earn below the qualifying earnings threshold, or who are under 22 years of age.
Follow the link for a simple, printable checklist – https://www.checkli.com/s/t3Z8eyDK
Auto-enrolment has arrived for small businesses. For many the best option is to outsource the often complex and demanding process of auto-enrolment. By outsourcing to Stipendia Payroll Solutions, you can take auto-enrolment off your mind and ensure it is handled on time and to plan. Contact us for more information on how Stipendia Payroll Solutions can help your business.