All UK companies that have employees will be affected by auto enrolment, and therefore need to make plans for it. Regulations regarding workplace pensions have been changed so that more people can save towards their retirement, especially low income workers. Rather than an employee making the decision of whether to join a pension scheme, they will be enrolled automatically. To opt out of the scheme an employee has to notify the employer.
When will the changes affect my company?
The enrolment process will be introduced over a six year period, with large companies being auto enrolled during the first stages of the process. Staging dates have been issued for all employers, based on PAYE schemes held on 1st April 2012. The criteria used for the staging date is the number of employees and the employers with the most employees on 1st April 2012 will be given the earliest staging dates.
Where will I find my staging date?
For most companies, the staging date will be included on the annual employer return form P35 from HMRC. It will be included on other correspondence throughout the year. The staging date for most small employers, with fewer than 50 employees, will be during 2015 and 2016 and completed in 2017. For employers who set up a PAYE scheme after 1st April 2012, the staging date will be in 2017. It is possible to move a staging date forward by notifying the Pensions Regulator. From February 2014, employers with between 50 and 249 employees will be given a staging date which falls from 1st April 2014 to 1st April 2015.
Preparing for the auto enrolment
As an employer you must choose an ‘automatic enrolment scheme’ which meets the qualifying criteria. If an existing scheme meets the criteria, this may be used, or the scheme may need amending slightly to comply with regulations. An existing scheme may be used for the existing members, while a new scheme may be required for new employees. One of the new schemes available is NEST, THE National Savings Employment Trust. This scheme was introduced by the government and has to accept all employers who apply.
Once a scheme has been selected, the joining process must be understood and complied with which will take up valuable time. Data will have to be submitted to the pension provider for all employees. The criteria and regulations regarding auto enrolment are complex and it may be advisable to seek professional advice before making any decisions.
For more information regarding Auto Enrolment for employers, see our guide here.
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