Pensions & Employer Auto Enrolment
The law on workplace pensions has changed and every employer with at least one member of staff now has new duties including automatically enrolling eligible employees in to a pension scheme that the employer has set up.
As financial planners for individuals we work with a trusted partner to provide our clients with guidance and support on Auto enrolment matters. I asked Sarah Walker from One Pension Consultancy what advice she would give to employers or employees on Auto enrolment.
This is what Sarah said…
Between January and March next year, roughly 100,000 small employers will need to comply with auto-enrolment and workplace pension legislation. This pattern is set to continue with an increasing number of employers being subject to the new legislation.
Many employers believe that auto-enrolment is simply about paying into a pension on behalf of their employees. Although this is a very important part of the legislation, if you are an employer it is crucial that you understand what action you need to take when. Here are some key steps we would recommend that help ensure you don’t fall foul of the requirements:
find out what your staging date it. This is the date from which you need to comply. You can find this out by visiting The Pension Regulators website.
Consider what workers you have and what actions you need to take with different categories.
Select a pension provider and set your pension up as early as possible. The pension you use needs to meet certain requirements. This means that even if you are already paying into a pension on behalf of your employees, it won’t necessarily comply with the legislation. Also bear in mind there is a significant increase in the number of employers staging from next year. This is likely to impact on market capacity. Act now to ensure you are still able to make the right choices.
Communicate with your staff – there are statutory requirements with regards to what you need to tell employees. You may also want to think about providing information over and above this level to ensure they understand what will happen and when.
Consider your processes – auto-enrolment isn’t just a one-off exercise. Action may need to be taken every time you pay your employees. Make sure you know the processes and allocate duties.
Make sure you keep records – The Pensions Regulator requires you keep certain information on the pension, in some case for at least six years! If you are an employer, make sure you get to grips with the requirements and what is expected of you. Significant fines could be imposed if you don’t!
Mark Penston is a Partner and Chartered Financial Planner with Bluesky Chartered Financial Planners.
Sarah Walker is a Partner at One Pension Consultancy