Auto enrolment: don’t get caught out by workplace pensions

Woman Dropping Coins Into Jar Labelled Pension

You’ll have noticed a lot of talk about changes to workplace pensions over the past few years. And you’ll also be aware that ‘auto-enrolment’ – the compulsory provision of a workplace pension for your staff – was on its way.

But what does auto-enrolment mean for you?

The big corporate-sized businesses are already meeting this auto-enrolment requirement, and most smaller UK businesses (yours included) will need to have an auto-enrolment pension scheme up and running in the very near future – your staging date can be found out here by entering your PAYE reference.

So, with time slipping away, now is the time to assess how auto-enrolment will impact on your business.

It’s by no means a simple task – setting up the right systems, admin and payroll software is a big job. And that means acting fast to avoid being caught out by workplace pensions.

How will auto-enrolment affect my business?

In a nutshell, it means you’ve got to set-up a pension scheme for your staff.

If you’re an employer in the UK, you’re now legally obliged to put certain employees into a pension scheme and make the necessary contributions.

Not everyone on your workforce is eligible – to be eligible, you must be over 21 and earning an annual salary of more than £10k. It’s also possible for employees to opt into auto-enrolment, even if they don’t meet the criteria.

Once you’ve found out your staging date you can start planning your timescales and working out what actions need to be taken to get you up and running with a compatible pension scheme.

In short, the main things you’ll need to do are:

  • Find a suitable pension scheme and provider for your employees.
  • Communicate all the workplace pensions changes to your employees.
  • Update your HR and payroll systems to cope with the extra demands.
  • Pay employees’ pension contributions each period through your payroll.
  • Check, update and keep records on everyone who’s eligible.

Employees can opt out of auto-enrolment if they choose to ­– they have to complete an online form to do this. And it’s your job to make sure you review who’s opted in, and who’s opted out, every time you run your payroll and contributions are made.

How much will you and your employees need to contribute? The contributions levels will gradually scale, for both of you, as you can see below:

 

Date Employer minimum contribution Total minimum contribution
Before April 5 2018* 1% 2% (including 1% staff contribution)
April 6 2018 – April 5 2019* 2% 5% (including 3% staff contribution)
April 6 2019 onwards* 3% 8% (including 5% staff contribution)

Making sure you are on top of these minimum contribution levels, and meeting all your requirements is a complex task – and certainly not for the faint-hearted!

The impact on your payroll function

At first glance, auto-enrolment may seem like a pensions issue. But, in fact, it’s also a payroll challenge as well.

One of your biggest responsibilities will be reviewing, updating and setting up your payroll software to deal with the added workload of making pensions contributions and keeping all the right records on your staff.

When doing payroll calculations, it’s important to make sure you are getting the contributions and deductions right. With this in mind, it’s vital that your payroll software is up to task – talking to a payroll professional will certainly pay dividends.

We’ll help you remove the workplace pension worry

Our Payroll team is here to help you with your payroll and pension contributions.

Buying new payroll software can be costly, depending on your choice of system, and swapping systems can cause upheaval to the business, so it’s vital that you choose the best possible system.

There are a lot of moving parts in meeting your auto-enrolment requirements, not to mention the strict deadlines and potential penalties for missed staging dates.

The easiest way to remove the workplace pensions worry from your shoulders is to set up a meeting with our Payroll team. We’ll help you review the impact of auto-enrolment for your business and can show you exactly how we can help you make the process as stress-free and seamless as possible.

Think about the cost implications

Auto-enrolment isn’t just an administrative and payroll task – the legal requirement to contribute towards your employees’ pensions is also a significant new cost to work into your annual budgets and cash-flow planning.

Think about how pensions affect your budgets, especially if you’re bidding for long-term contracts or when assessing pay rises. Factor in the additional costs and look at the short and longer-term impact this will have on the business.

Offer a pension scheme with the right benefits

Choosing the right pension provider and pension scheme for your business is also important – both for the business and your workforce.

Our Financial services team will help you choose a pension provider that offers the right benefits and additional services for your business.

An enhanced pension scheme sets the right tone and will be a great incentive and reward for your team. There’s even the opportunity to offer more than the bare minimum contribution and to ‘top up’ your employer contributions as a value-add incentive for your employees.

Come along to our auto-enrolment course

We know that auto-enrolment can sound confusing. So we’re running some helpful two-hour auto-enrolment courses on 29 September 2016 to help get you and your business up to speed with the changes.

Choose between the 8am breakfast slot, or the 11am lunch slot (with your meal included), and come along to The Auctioneer, Rosehill, Carlisle to get your auto-enrolment planning into gear.

Planning ahead really is the watchword – so the earlier you start with your auto-enrolment reviews and set-up the more effective your business will be at overcoming the inherent challenges of getting a compatible pension scheme up and running.

Our Payroll and Financial Services team will be on hand to answer all your pensions and payroll questions. And we’ll be offering full and supportive advice over breakfast or lunch, so you can go into auto-enrolment with a clear vision of what will be best for your business.

Sign up here for our auto-enrolment course

If you’d like to know more about our auto enrolment solutions, please do contact your local Saint & Co office.