Category Archives: Pensions

Workplace Pensions are Here – Act Now, it’s the Law

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Even if you employ just one person, you must provide a workplace pension.

Small employers are being warned to act now to ensure they are ready to meet their new workplace pension duties which will soon apply to them.

All employers have a legal duty to automatically enrol certain staff into a workplace pension scheme by a deadline that is specific to them. Automatic enrolment is automatic for workers but not for employers.

It applies to all small businesses, even those with only one member of staff – from dry cleaners, to florists, to newsagents and pubs.

Around half of employers who had thought they would be ready to meet their duties on their staging date found that they were underprepared and had a last minute rush to get finished. Research by The Pensions Regulator has shown that 40% of really small employers (those with less than 4 workers) do not know their staging date.

It is vital you do not guess your staging date – use the staging date tool on The Pension Regulator’s website, which only takes a few minutes (you will need your PAYE).

The experience of thousands of employers who have been through the process now is that automatic enrolment takes longer than they expect to prepare for – the regulator recommends making a start 12 months beforehand.

Don’t get caught out. Start your preparation early.

Useful links:

Tools to get you started: www.tpr.gov.uk/employers/beginners-guide-to-auto-enrolment

The essential guide to automatic enrolment: www.tpr.gov.uk/ae-essential-guide

Find out your staging date: www.tpr.gov.uk/staging

Nominate a contact: www.tpr.gov.uk/nominate

Planning tool: www.tpr.gov.uk/planner

6 month checklist: www.tpr.gov.uk/six-month

Subscribe to TPRs news by email: www.tpr.gov.uk/subscribe

Or click here to download a PDF of the The Essential Guide to Automatic Enrolment from the Pensions Regulator.

Are You Ready for Pension Auto Enrolment? Part Two

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Are You Ready for Pension Auto Enrolment? Part Two

All businesses will soon have to provide a pension for their staff. The start date depends on the size of your business. But there’s a lot more to think about than just the date. Last month we brought you five tips to consider (click here to read that blog) and here are five more:

Existing joining methods may be fit for purpose. Many employers believe they will need to change the way they currently join employees to their pension scheme. However, your existing method and processes for joining may already be suitable. For example, if your employees already join the pension scheme via their contract of employment, then there may be no need to introduce a different method. This can also allow all staff to be treated the same way, regardless of their age or income. But it’s likely to mean changing processes and potentially employment contracts, to meet the new legal requirements.

Use waiting periods to fit your business. The majority of employers have used waiting periods aligned with payroll so employees join on the first day of the pay reference period. This avoids having to calculate, explain and manage part payments. But it is also possible to build in a waiting period to avoid one off events such as bonus payments or seasonal increases. Or to allow time to organise contract joining before the auto-enrolment duty kicks-in. But remember while employers can delay assessment and auto-enrolment, they cannot delay the statutory communications to their employees.

Communicate with employees early. Engaging with your employees and clearly communicating the changes in advance of auto-enrolment will make sure that when it happens, they understand why money is being deducted from their pay. This will also ensure they appreciate the value your contribution is adding while reducing employee questions.

Review existing default investment funds. You have a regulatory responsibility to make sure the auto-enrolment default investment option is suitable for your employees that will be enrolled to the scheme. Existing investment solutions may not be appropriate. Advice is crucial to getting this right. You also have a responsibility to have an on-going investment governance framework in place.

Remember to register with the Pensions Regulator. You must register your scheme with the Pensions Regulator within four months of your staging date. Details must be given of your qualifying workplace pension scheme and how you have gone about enrolling employees to the scheme.

 

There is a lot to think about and do when it comes to setting up your company pension. These five tips, combined with the five we gave you last month, give you a good starting point. In the meantime, if you have any questions about pensions, do get in touch.

Are You Ready for Pension Auto Enrolment? Part One

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Are You Ready for Pension Auto Enrolment? Part One

All businesses will soon have to provide a pension for their staff. The start date depends on the size of your business. But there’s a lot more to think about than just the date. Here are five tips to consider:

Don’t leave it too late. The auto-enrolment ‘to-do’ list for employers will take some time to complete; don’t leave it to the last minute. Collating data can mean sourcing information from various systems. In addition, enrolling employees to the pension scheme could involve changes to their contracts of employment, which requires a three month consultation period. An early start is ideal – 6 to 12 months ahead of your staging date is ideal.

Understand your key dates. It’s crucial that you not only understand when your staging date is, but also any key company dates such as the pay reference period and payroll cut off. Documenting these dates and then overlaying the new dates when actions need to be completed as a result of pension reform legislation will help gauge the impact on the business. It will also help decision making, such as the need for a waiting period and if so, how long it should be.

Quality of data is key. It’s easy to underestimate the complexity of the data you require. You’ll need data for employee eligibility assessment, joining, contributions and opt outs. Inevitably this will come from different sources and systems. It takes a significant amount of time to do this within payroll cycles and the frequency that this data is needed also adds a layer of complexity. The quality of the data and the processes for sourcing the data for each payment cycle will be crucial to how smoothly that works each pay period.

Choice of contribution basis. Your chosen scheme must meet a quality standard, based around a minimum level of benefit or contribution, so you need to start budgeting for any extra costs. There is more than one acceptable contribution basis and they can be mixed and matched across the workforce to suit different reward mechanisms or pay patterns. What will work best for you? The key point is that the contribution basis and definition of earnings can be chosen to suit your business.

Method of contribution. Salary Exchange should also be considered as this can offer you significant cost saving benefits. However, where salary exchange is being used, this decision should be made prior to the scheme staging, otherwise it can cause additional administration for employers.

There is a lot to think about and do when it comes to setting up your company pension. These five tips give you a good starting point and in a future blog we’ll share with you another five tips. In the meantime, if you have any questions about pensions, do get in touch.