There’s a pensions problem in the UK. People are living longer, greater numbers of people are becoming pensioners and there’s insufficient provision being made to take care of the UK’s ageing population in their retirement
Pensions auto enrolment is the Government’s response to this pension problem. By making it mandatory for all businesses to provide a suitable pension scheme for their employees, some of the burden will be taken off the state pension system.
But, in doing so, a new burden has been created: a burden for small business owners. It’s now your responsibility, as the director or owner of a UK business, to provide the right kind of pension scheme for your staff.
Back in March, we asked if your business was ready for auto enrolment. Eight months down the line, this question has an even greater urgency to it. If you’ve not yet chosen a scheme then you need to act now.
And to help you see the need for prompt action, we’ve outlined the process you’ll need to go through to meet your responsibilities and get your auto enrolment pension scheme up and running.
Choosing the right scheme
As an employer – even if you’re a two-person business with only one employee – you’re now legally obliged to source and provide a pension scheme for your workers.
Researching, choosing, implementing and running a scheme will be a complex and time-consuming responsibility. There is a standard scheme that you can sign up to – the National Employment Savings Trust or NEST, as it’s more commonly known.
But there are also a multitude of private schemes, pensions providers and retirement planning options out there in the marketplace. And knowing which scheme is right for the size of your company, and which option will guarantee the long-term security of your employees, is a confusing business.
The complexity of implementation
Even once you’ve chosen a scheme, the hard work doesn’t stop.
There’s a whole tranche of processes, reviews and administrative tasks to take care of before you’re ready for your ‘staging date’ – the day by which you must have met your responsibilities and have your scheme up and running.
Just a small selection of these tasks involve:
- Reviewing your workforce for eligible employees.
- Updating your payroll processes and systems to meet the new requirements.
- Writing and sending out communications to your workers outlining the changes to their pay and how they’ll contribute to the scheme.
- Finding and signing up with a suitable scheme provider.
Allowing for the lost time and underlying costs of the whole process, it’s easy to see how auto enrolment can very easily eat into your resources and take up a huge amount of your attention as a director.
Time is running out
Auto enrolment is a mandatory requirement, so there’s no way putting off the inevitable.
Depending on the size and age of your business, your staging date will fall between 2015-2018 – you can check your company’s staging date on The Pensions Regulator website here. You should already have been informed of your specific staging date, but it’s prudent to find out your deadline and start planning now to make sure you’re ahead of the game.
And missing that staging date isn’t to be advised. For companies that miss their deadline for implementation, there’s a fixed initial penalty of £400, which could be escalated to a financial penalty of up to £5,000 for individuals and up to £50,000 for organisations.
So planning and timing will be critical to your auto enrolment strategy.
Talk to us about your auto enrolment requirements
As you can see, auto enrolment is a complex and onerous business. That’s why Tyrrell & Co has put together a comprehensive package of advice to help you reduce the burden on your business and work to a timescale that delivers on time.
We can give you the pensions, payroll and administration guidance you need and help you meet all your auto enrolment requirements by your staging date.
If you’d like to talk to us about your auto enrolment needs, contact us to arrange a conversation about how we can help.