With an ageing population that’s living longer and a staggering 70% of people thought to be without a pension, the State Pension system will soon not be able to cope with the demand. To help combat this, the government is making it mandatory for people to join a pension scheme.
By April 2017 all eligible employees must be auto-enrolled onto a pension scheme. It’s important that as an employer you have a plan of action for how your company’s payroll and pensions are going to adapt to auto-enrolment to ensure that you avoid any penalties.
What you need to plan for before your staging date
Your company will have five months from your staging date to enrol all eligible staff. Before your staging date you should establish which of your employees are eligible, and which have the right to opt in or join. To be eligible employees must be between 22 and State Pension age and earning more than £10,000 a year.
You also need to make sure that you have a pension scheme in place that is compliant with The Pensions Regulator.
You can find your staging date using your PAYE reference through The Pension Regulators site - www.thepensionsregulator.gov.uk/employers/tools/staging-date.aspx.
What you need to plan for after your staging date
As an employer you have three main responsibilities during the five months after your staging date.
1. Enrol all eligible members of staff.
2. Write to each member of staff informing them about auto-enrolment.
3. Submit an online declaration stating you have fully complied with
auto-enrolment to The Pensions Regulator.
To help ensure a smooth transition and avoid missing any deadlines you should prepare a detailed plan prior to your staging date outlining when you will enrol each member of employees, when communications will be sent, and when you will submit your online declaration.
Once you have fully complied with auto-enrolment you should put in place procedures to ensure that any new employees or current employees that become eligible are auto-enrolled in line with government regulations.
Where an employer has not understood their duties or been unable to comply,
The Pensions Regulator will assist in making sure you are compliant. However, further failure to comply will result in The Pensions Regulator issuing a range of civil and criminal enforcement measures.
Both fixed fines and escalating penalties will be issued to those who fail to comply. To make sure there is no incentive for an employer not to comply, fines will be based on the cash flow benefit the company would receive from not complying. Therefore, there would be no incentive for an employer simply to pay a fine and not comply.
Hallidays are here to help
We can help make sure you compliant with auto-enrolment and avoid any penalties, allowing you to spend your time focusing on your business.
Let us offer you a helping hand with Auto Enrolment at our upcoming event on the 11th March, where we will address the implications to you and your business for pensions, payroll, and HR. Book your place here