By now most of us will have seen the Government adverts for the new compulsory workplace pensions, but did you know that the new auto enrolment initiative covers businesses of all sizes and in every business sector? This means that if you employ even one individual on your farm, then Workplace Pensions will affect you.
Under the new legislation each business will be provided with a staging date, by which they must be ready to provide all qualifying employees with a pension at work.
Though this date could be as late as 2017, for those who employ less than 49 staff, it could also be as soon as August 2015, so it is essential to start planning and budgeting for the changes now.
Under the new regime each employer is required to provide a pension scheme to which all qualifying employees must be registered. The employer must also make contributions into the scheme, equivalent to a fixed percentage of each individual’s annual income. Initially, employer contributions have been set at a minimum of 1% of qualifying earnings but this level will progressively rise until 3% is reached in October 2018. These are minimum levels.
All eligible employees will also be required to pay into the scheme and appropriate measures must be made to ensure that contributions can be deducted through payroll and paid over to the pension provider. The initial employee contribution is set at a similar 1% of qualifying earnings, but this will rise to 5% by 2018.
Any individual who ordinarily carries out work for you in the UK, is not currently paying into a pension scheme and meets the minimum age and earnings requirements is considered to qualify for auto enrolment. Currently these conditions specify that qualifying employees are between 22 years old and state pension age and earning more than £10,000 per year.
So, how will your business prepare for Auto Enrolment?
The key to being able to implement the new legislation is to prepare in plenty of time. Here are the key stages:
1. Confirm your Staging Date
It is essential to understand exactly when your auto enrolment deadline will be. If you are not aware of the exact date for your business, consult the Department of Work and Pensions website which will be able to provide you with the latest information.
2. Assess your Staff
Though your workforce will be formally assessed on your staging date, it is a good idea to carry out a preliminary investigation as soon as you can.
3. Choose the appropriate ‘Qualifying Scheme’
As an employer you are responsible for choosing a pension scheme that will provide retirement benefits for your employees. This is an incredible responsibility and can take a lot of thought and consideration.
For those businesses that already have a pension scheme in place, now is the time to assess the product offered and ensure it meets the minimum standards of the new legislation or if you have to choose an alternative.
4. Talk to your Staff
Though this can be stressful and confusing, it is also a very difficult subject for many employees to understand. Give them as much information as you can and keep them up to date with the changes you are making.
5. Get help
The most important step of all is to know that you are not alone. We can advise you on all aspects of preparing your business for auto enrolment, so that when the time comes you will be ready.