Andrew Hopper, Head of Workplace Pensions at Albert Goodman Chartered Accountants, highlights important factors for businesses to be aware of regarding auto-enrolment.
The Government ’s requirement that private sector workers provide for their retirement affects all UK employers.
Every employer has a duty to adopt a qualifying workplace pension scheme into which it will automatically enrol all of its eligible employees and make contributions on their behalf.
The Government’s Workplace Pensions regulations place new duties on all employers, the two most significant of which are:
- All employers must have installed a qualifying workplace pension scheme by their company’s “Staging Date” – this date is set by The Pensions Regulator. The Pensions Regulator will send employers letters in the run up to staging date confirming the date by which the employer must comply.
- Employers will be responsible for making sure that certain employees, known as “eligible jobholders”, are automatically enrolled into their company’s qualifying workplace pension scheme. Also that the appropriate level of contributions are made and deducted from pay. An eligible jobholder is anyone aged between 22 and state pension age, with earnings, the earnings of £10,000 or more (Employers also have to deal with opt-outs from the scheme and refunds of contributions.)
Why you need to act now?
Even if you haven’t heard from the Regulator yet or think that your Staging Date is probably a long way off, there are three good reasons why you need to do something now:
- Provider capacity issues: Pension providers can only take on a certain amount of cases.
- Adviser capacity issues: There are a limited number of independent financial advisers who specialise in this market and have the relevant experience.
- Compliance issues: The Pensions Regulator has auditors investigating non-compliance with the power to take enforcement action including substantial fines. Typical problems are inadequate planning and preparation to address all the strategic issues involved such as payroll system amendments, necessary changes in contracts of employment, record keeping and communicating with employees.
If the above sounds daunting and confusing, you are not alone. In a survey published by the Pensions Regulator, 76 per cent of employers questioned stated they would be seeking ‘independent’ advice on Workplace Pensions.
To find out more about how the new regulations will affect your business, or for a free factsheet on Workplace Pensions, arrange a no obligation initial consultation with Andrew Hopper. Call 01823 286096 or email firstname.lastname@example.org.