For many businesses their auto-enrolment deadline has already passed and they are already fulfilling their requirements. The size of a business and when it started to pay employees affects when the government requires it to auto-enrol, but the absolute cut off point for all businesses is February next year.
Online local services marketplace, Bidvine.com, carried out a survey recently asking its registered small business owners a series of questions on auto-enrolment. It found that:
- 35% of responders didn’t know what pension auto-enrolment is
- 43% said that the expense of contributing to employee’s pensions will affect hiring new staff
- 66% didn’t know the deadline for auto-enrolment
Here are a few tips for those of you who haven’t yet put plans in place ready for your auto-enrolment deadline.
- Under the Pensions Act 2008, every employer in the UK must put certain staff into a workplace pension and contribute towards it. This is called ‘automatic enrolment’.
- If you run a director-only business, then you may be exempt. However, don’t just assume you’ll be exempt – it’s important that you find out how the law applies to you, so that you don’t risk a fine. You can check with The Pensions Regulator for guidance and information on how automatic enrolment applies to you.
- Once you employ at least one person you are an employer and you’ll have certain legal duties.
- If you are employing staff for the first time after 1 October 2017, your legal duties for automatic enrolment begin on the day your first member of staff starts work.
- If you have employed someone since 2 April 2017 or you are going to employ someone before 30 September 2017, you can check with The Pensions Regulator when your auto-enrolment duties will start.
- So if you are in the process of recruiting your first member of staff, or are planning to in the near future, it is important that you prepare as early as you can.
- On the date your duties start you must assess your staff to see if they meet the age and earnings criteria to be put into a pension scheme for automatic enrolment. Any staff who are aged between 22 and State Pension Age and earn over £10,000 per year, or £833 per month or, £192 per week must be put into a pension scheme and both you and the employee must pay into it.
- If you have staff for whom auto-enrolment applies, you will need to choose a pension scheme.
- Once you have your pension scheme in place you need to put qualifying staff into that scheme and write to the staff to inform them of the details.
- You will then need to fill in a Declaration of Compliance on The Pensions Regulator website – this needs to be done within five months of the start date of your auto-enrolment duties.
- If you have a staff member(s) but they are not eligible for auto-enrolment, you will still need to complete a Declaration of Compliance to inform The Pensions Regulator how you have met your duties.
- Your ongoing duties then include: monitoring the age and earnings of all staff each time you pay them to see if they need to be put into a pension scheme and how much you need to pay in; you will also need to manage requests to join or leave your scheme; plus, every three years you will need to put staff back into your pension scheme if they have left it and if they meet the criteria to be put into a pension scheme – this is called re-enrolment.
Remember, you risk a fine if you do not comply with the law on time so it’s important that you find out your obligations and make preparations in good time so that you can auto-enrol employees as you are required to. Get in touch with us if you would like help and advice on this subject.