Is auto-enrolment coming to your small business?

Workplace pension law has changed. Every employer has new legal duties to help their workers in the UK save for retirement. They must automatically enrol certain workers into a qualifying workplace pension scheme and make contributions towards it. A qualifying scheme is one that meets the strict criteria for workplace pensions set out by The Pensions Regulator (TPR). It must be registered with HM Revenue & Customs for tax purposes and satisfy certain quality standards set out by the regulator.

Automatic enrolment applies to all employers; even to firms with just two employees. The deadline for establishing a pension scheme differs depending on the size of the company on 1 April 2012. Most employers run defined contribution (DC) pension schemes and to qualify minimum contributions must be made. Many existing pension schemes will already qualify under the auto-enrolment rules but it is worth checking just in case. The only thing that may have to change is the amount the employer and employees pay into the scheme.

Your deadline for being compliant with your new automatic enrolment duties is known as your staging date. Auto enrolment started in October 2012 with the biggest companies in the UK joining first. The ‘staging dates’ or deadlines for auto enrolment run until 2017, which is when the smallest companies will have to join.

Companies that had fewer than 50 employees on 1 April 2012 will not be enrolled until June 2015 at the earliest and those with fewer than 30 employees have until April 2017. New employers have until February 2018 to put auto enrolment in place. It is important to look up your staging date using your PAYE number as soon as possible, to allow your company to start planning for automatic enrolment.

There’s a lot you need to do to get ready for automatic enrolment, so allow plenty of time to prepare: start today. Get information and advice; develop a plan to check your processes and software; assess your workforce; review your pensions arrangements and communicate with your workers.

You have four months from your staging date to complete registration with TPR and to provide certain information about how you’ve complied with your automatic enrolment duties. Make notes of key details as you prepare to make the online registration process quick and easy. Employers need to automatically enrol certain workers into a pension scheme and make contributions towards it.

TPR has a range of information available to help you understand and prepare for your new automatic enrolment duties. Employers may ask their advisers to carry out some or all of their automatic enrolment duties on their behalf and they too can access useful information and resources to help them in the specific areas where clients could ask them for help with automatic enrolment.

Workplace saving has become an important pillar in the government’s bid to encourage people to save more for their retirement and this has significant implications for employers, no matter how small their business.

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