Auto-Enrolment and Small Businesses: How to Prepare
June 24, 2014 By SGW Payroll | Budget
Auto-enrolment, already underway in large companies, is being rolled out to smaller organisations in the next few years – so you need to start planning for it.
What is auto-enrolment?
Auto-enrolment is a compulsory scheme (https://www.gov.uk/auto-enrolled-into-workplace-pension) in which a company’s employees are automatically enrolled in a pension plan by their employer. This is a change from the previous law on workplace pensions, and will eventually affect every employee in the country. It is important for finance directors to get to grips with the process now.
What you need to know about auto-enrolment
Your approach to auto-enrolment can be broken down into six steps:
1) Know your staging date. This is the date by which your organisation needs to comply with auto-enrolment. You should have received this in writing, but you can check on the Pensions Regulator Website by inputting your PAYE reference. (http://www.thepensionsregulator.gov.uk/automatic-enrolment.aspx)
2) Determine who is eligible. Basically, all your UK-based staff aged between 22 and the state pension age, who are in the PAYE system, need to be auto-enrolled. Consult the Department of Work and Pensions website for full details.
3) Tell your staff about the scheme. The government has provided statutory information about auto-enrolment for distribution to staff.
4) Consider how, as an employer, your scheme will run. For example:
Will you make the minimum contribution, or an amount greater than this? The minimum depends on a person’s gross earnings, which factors in commission, overtime, bonuses, and other statutory payments
Will you be taking advantage of the three-month postponement option? This is something that employers might choose to do if, for example, they have temporary staff.
These issues will need to be given some thought.
5) Seek advice from a Pensions Advisor. They will know which providers and plans are best for you, and will be able to discuss the costs involved with you.
6) Choose your provider. Do this with care, but be careful not to delay. Pension providers are experiencing an influx of companies as a result of the legislation, so some urgency is required.
What about payroll?
Obviously, whatever route you take, there will be some calculations required. Many finance directors have already seen some changes to their payroll as a result of preparation for the next tax year, and when auto-enrolment comes to their organisation, they will be required to implement further modifications.
For this reason, many finance directors choose to let a specialist payroll service take care of everything – and, just as it is essential to choose the correct pensions provider, so it is essential to pick the right payroll service.
SGW Payroll is a UK-based company that provides a seamless payroll service to large and small businesses alike. We will get all the systems set up quickly and efficiently, leaving you to concentrate on maximising your business’s efficiency and productivity.
With auto-enrolment compulsory even for the smallest companies – those with under 50 employees – by June 2015, it is essential to start planning now. Once you have decided on your provider, give SGW Payroll a call on 0800 622 322 or email us to find out more.Return to newshttps://www.sgwpayroll.com/news/latest-news/