Pensions have changed.
Under the Pensions Act 2008, every employer in the UK, no matter how small, is required to help more of their workers save for their retirement. Naylor Wintersgill Managing Partner, Victoria Wainwright, advises, “If you employ at least one person, it is your responsibility to register with the Pensions Regulator and if needed set up a pension scheme. Here at Naylor Wintersgill, we are committed to supporting our clients as they prepare for automatic enrolment.”
Pensions Automatic registration has been around for quite some time now, but it seems that many businesses are still yet to even start preparing for the changes ahead and are struggling to negotiate around the jargon.
Naylor Wintersgill payroll bureau manager Kath Buck makes the position clear: “If you have a PAYE reference, you will have certain legal duties to perform. Automatic enrolment is here to stay, and we are urging all our clients to take action. With substantial penalties for non-compliance, it is not something you can afford to ignore.”
Duties of the Employer
It is important that you understand what you need to do and by when. Any business with a PAYE reference must ensure you have registered with the Pensions Regulator and if you have eligible employees, provide a mandatory pension in place by the allocated staging date (the date your automatic enrolment duties legally come into effect).
The Pensions Regulator is the regulator of work-based pension schemes in the UK, and you will be required to let The Pensions Regulator know how you have met your automatic enrolment duties.
Planning is Key
You may think that your staging date is still well into the future, and you do not need to think about it just yet, but it is important to allow up to 12 months to prepare for automatic enrolment.
As an employer, you are ultimately responsible for choosing the pension scheme for auto-enrolment. If you already offer your staff a pension plan, now is the time to make sure it is compliant with the government’s pension reform regulations for automatic enrolment. This may not be the case, and you will then need a chance to set up a compliant scheme.
The next step is to start considering costs to the business. You will need to make a regular contribution into the pensions of your eligible employees, and it is important to ensure your plan reflects the changes ahead. It is easy to overlook, but you will also need to consider costs for setting up the scheme, ensuring that you have provisions in place to manage your on-going auto-enrolment duties and any independent advice you might take. It may be good practice to prepare projections to consider the impact of these costs and contributions on the business.
Choosing the most suitable pension provider
It is the employer’s responsibility to select the most appropriate pension provider for both the business and their employees. You may feel that an independent financial adviser (IFA) may be required to assist you. However, there are some direct providers in the marketplace with excellent offerings for the SME market. Examples of such pension providers are Peoples Pension, Smart Pensions, NOW pensions and NEST, the government-led pension scheme.
The world of automatic enrolment can be daunting, and it can potentially be a significant financial and administrative burden on your business. There are some payroll bureaus such as Naylor Wintersgill offering a managed solution for all pensions’ auto-enrolment functions. Many of our clients are finding it extremely beneficial for us to manage their payroll requirements, on-going assessments and record keeping – all of which are paramount to remaining compliant.”
It is critical to remember that you will have ongoing auto-enrolment responsibilities once you have set up your scheme up and you need to consider the impact on your time and resources to ensure you remain compliant into the future. You will need to pay regular contributions, keep records of your automatic enrolment activities and monitor the ages and earnings of your staff (including new starters) and enrol them if they become eligible.