Auto-enrolment: Don’t Leave It Until The Last Minute!
March 2, 2014 By SGW Payroll | Paye
Auto-enrolment is a government-led scheme to give all employees the right to have a workplace pension. Under the programme, employers are legally obliged to enrol their workforce in a pension plan; large companies are already subject to this, while smaller companies are approaching their deadlines. Employers will also be required to contribute to the pension, to add to contributions made via the member of staff’s wages. While employees will be able to opt out of the initiative, the default position is that the majority of people will be enrolled.
Auto enrolment for small companies
For smaller companies, the cut-off date is looming. The Department for Work and Pensions (DWP), along with The Pensions Regulator, have been instrumental in providing information to employers to ensure they are aware of their legal responsibilities, but many smaller businesses are not yet sufficiently prepared for the change.
Getting systems in place early is the best way to ensure that the shift from one system to another is streamlined and error free. Last-minute confusion, mistakes and misunderstandings could cause issues with legal compliance, so getting auto-enrolment set up now can help to avoid a late rush, not to mention extra stress or penalty fines, when the deadline arrives.
Larger companies are already required to have implemented the auto-enrolment legislation, where every employee on PAYE will be entitled to a workplace pension. So now is the time for small businesses to start getting their systems prepared.
So, what should a small business do to make sure that their auto-enrolment plans aren’t left until the very last moment? Here are some key ways to start to prepare:
Inform your workforce
All businesses should have received information from the Department for Work and Pensions that they can distribute to staff to explain the scheme. Ensure that your employees understand what is going to happen, how it will work, and what their rights and responsibilities are.
Understand who is eligible
It is important to identify which of your employees qualify for this workplace pension scheme (in reality, it will be the majority, if not all of them). This quick survey can help you to establish who is eligible for this scheme. (http://www.thepensionsregulator.gov.uk/employers/tools/employer-duties.aspx)
Find out for sure when your deadline is
Known as the ‘staging date’, the Pensions Regulator’s website will tell you precisely when you need to have your employees enrolled. (http://www.thepensionsregulator.gov.uk/employers/tools/staging-date.aspx)
Look at the pension options available
Taking advice from a pension expert may be advisable, due to the wide range of different options. Choose the best pension plan for your business and your staff, and get it set up as soon as possible.
Decide how you want to implement the programme in your business
While the auto-enrolment scheme is compulsory, you do still have some decisions to make about how it will work. Employers will be expected to make a minimum contribution towards their employees’ pension plans, but you can choose to increase this amount if you prefer.
Consider outsourcing your payroll and pension arrangements to an external company
As the legislation and rules get more and more complex, letting specialists take charge of these incredibly intricate calculations will take the pressure off a business, who can use the extra time they gain to do what they do best.Return to newshttps://www.sgwpayroll.com/news/latest-news/