A Six-Step Guide to Auto Enrolment
Auto enrolment was initially rolled out in October 2012, beginning with the largest companies. Over the intervening years, the focus has shifted to medium sized businesses, and with the advent of April, small and micro businesses are now preparing for their staging dates. Over 800,000 small businesses will reach their auto enrolment dates this year, and that number will reach more than a million by April next year.
It’s been coming for a while, so a great number of companies will already understand the preparations required and the processes involved for auto enrolment. However, for those with lingering doubts here is our easy six-step guide to auto enrolment:
Check your payroll software – it may sound obvious, but if your payroll software is not set up to cope with the demands of operating auto enrolment tasks, then you’ll need to switch software. This can be a lengthy process, so it’s best to check this right now!
Check your pension scheme to ensure it is suitable for auto enrolment. Most small to medium sized businesses will benefit from a scheme operated by a large, specialist pension provider, rather than a trust-based scheme which tends to require greater financial input and increased time dedicated to the management of it. For further information on choosing a pension scheme, or to confirm the suitability of your current provider, check The Pension Regulator.
Determine who amongst your staff is eligible for auto enrolment. Staff already subscribed to a qualifying pension at work are not eligible. Members must be aged between 22 and State Pension age and earn at least £10,000 per annum. Staff working in overseas offices are not eligible for auto enrolment. A full breakdown of those who are Eligible, Non-Eligible and Entitled can be found at Smart Pension.
Once Steps 1-3 have been completed and your staging date is reached, start making contributions!
It is a legal obligation that you inform your staff, in writing, within six weeks of your staging date, as to whether they have or have not been auto-enrolled. You must also state the type of pension scheme, who runs it, how much the worker will contribute and how much you as the employer will contribute. Some workers may wish to opt out, which is their right, so you must inform them of the procedure for this. Others who haven’t qualified may wish to opt in. You must also state how tax relief applies to the scheme and how it will affect their contributions.
Complete your declaration of compliance. This is an online service provided by the Pension Regulator. The declaration must be completed within five months of your staging date. You must do this whether your staff has been enrolled or not. You could be fined if you fail to complete your declaration!
Further help and guidance on auto enrolment can be found on the National Employment Savings Trust (NEST) website.
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