In order to accommodate future prosperity for the new senior generations living well into their eighties and nineties, the UK has essentially revolutionised retirement for its citizens. According to the Workplace Pension Reform, all UK businesses with one or more staff members must comply with Auto Enrolment, just one of many ground-breaking reforms.
Can you explain Auto Enrolment Compliance ?
Auto Enrolment Compliance allows a small percent of staff wages to be paid into a pension scheme, and in most cases, then be matched by contribution from the employer and the government. When your workers reach pension age, these funds will pay them extra income, on top of their State Pension.
As of March 2015, employers have enrolled almost 5.2 million workers directly as a result of this progressive initiative. Launched in 2012, large businesses were initially the highest participants, followed by medium-sized companies. Small and micro business owners had later staging dates, beginning in June of 2015.
Though it’s called ‘automatic,’ this just means the worker doesn’t have enroll by themselves. As the employer, it is up to you to take steps toward enrolling eligible persons who work for you. If you don’t have any workers, you will need to submit an online form to this effect. It’s a good idea to check in with your corporate business lawyer, just to make sure all the t’s are crossed.
What are the basic steps to take?
- Determine your staging date – See our next section on staging.
- Provide your point of contact – Nominate a responsible contact with the Pensions Regulator.
- Determine who you will need to enroll – Review the staff, and determine eligibility (see our section on who is eligible).
- Put together an action plan – An employer planner is available to help with this step.
- Set up a workplace pension scheme.
- Give written notice of the new pension rules to all employees.
- Register your pension scheme with the Pensions Regulator.
- Contribute regularly to the pension pots.
- Keep accurate records of contributions.
- Submit a Declaration of Compliance that you have complied with your duties.
- Regularly update your workforce records, adding those newly eligible.
- Reassess all employees every three years from your staging date.
When are my staging dates?
The government staggered the starting dates for business compliance with Auto-Enrolment; these are known as staging dates. The dates were set according to a company’s size and the amount of employees in a PAYE scheme.
For 2015, you are required to register within 4 months of the following staging dates:
- From April 1 2015 – Businesses with fewer than 53-50 employees must start the Auto Enrolment Compliance process.
- From June 1 2015 – Businesses with 30 staff or less must begin Auto Enrolment.
If you have any uncertainty, you may also request your company’s staging date online.
Who is eligible for Auto-Enrolment?
- Staff for whom you deduct income tax and National Insurance
- Staff who work in the UK, earning more than £10k a year
- Staff between 22 years old and State Pension age (currently 65 for men and 60 for women)
Remember, it is up to the employee as to whether they want to opt in; i.e. it is not mandatory, but it is necessary to give them the option. Statistically speaking, nine out of 10 workers have been opting in. According to this online table, certain workers (from 16-74 years) may also have a right to opt in.
How can I automate this process?
You might consider using payroll software, if you don’t already. There are several companies providing Auto Enrolment services and set up, some of the larger being cloud-based accountancy software giants: Sage and Intuit QuickBooks UK. They have built compliance features into their payroll software programs, to help eliminate the burden on employers.
If you are unsure about your standing with the Auto Enrolment Compliance process requirements, Linkilaw is here to connect you with an expert business attorney from our online community.