The workplace pension reform was introduced in October 2012 in response to difficulties arising from increased life expectancy and low pension savings. The initiative requires employers to automatically enrol eligible workers into a qualifying pension scheme and is being introduced on a staged basis according to business size.
According to the initiative, eligible employees must be automatically enrolled into a pension scheme which both the employee and employer contribute to. Workers who are not eligible for automatic enrolment must be enrolled should their status change. Each qualifying pension scheme must meet minimum standards in respect of the choice of investment fund and the level of contributions made. Employers can choose the pension scheme they use, which could include the National Employment Savings Trust (NEST) or other pension plans designed exclusively for smaller businesses.
The staging dates for smaller companies are now with us. Companies with less than 250 employees were affected from 1st April 2014. Between 2014 and 2015, there will be on average over 3,000 companies per month having to comply with auto enrolment (known as staging), with heavy daily fines for missing staging dates from The Pensions Regulator.
Between 2015 and 2017, over 1 million companies will be staging, which is a staggering 51,134 companies per month.
It is vital that you are aware of your duties in order to prepare you for your “staging” date.
Do not leave this until the last minute, or think “it doesn’t affect me” because anyone with a PAYE reference MUST comply and there are serious fines for non-compliance.
Many of our SME clients are looking to implement qualifying plans before their staging date, as they recognise the positive impact that early adoption is likely to have on their workforce. Additionally, early adoption will help to avoid the anticipated deluge of activity around the staging dates and help to control costs by phasing in the contributions.
Please talk to us about Auto Enrolment, we can help make compliance as smooth as possible!