Workplace pensions have been widely advertised in the press but there is still misunderstanding of who it applies to especially for small businesses.  Almost any company, except director only ones, must go through the whole process although it should not be too onerous a process if there are only a handful of employees and they use off the shelf payroll software.  All companies with a payroll should have received a letter recently asking them to appoint a contact person.  This would have looked similar to the one in my previous post Autoenrolment for director only companies

There are a few steps which need to be taken before your staging date referred to on the letter, by which time you need to have a scheme in place, and ready to start making pension contributions for employees.  There are full details on the Pensions Regulator website, but in summary:

  1. Know your staging date – you should already know this
  2. Provide a point of contact – you may already have done this
  3. Check who you need to enrol – see different classes of employees below
  4. Create your action plan – this is just to make sure every stage is completed

Getting ready

  1. Work out your costs – this is 1% of salary upto Sept 2017, 2% to Sept 18 and 3% thereafter, plus any costs to set up or run the scheme
  2. Check your records and payroll process – Payroll Manager and other proprietary payroll software holds all the information and can produce the file for upload to most pension providers
  3. Choose a pension scheme (or check your existing one) – the 3 common and “easiest” to use schemes are NEST, The Peoples Pension and Now, but there are other options which a financial adviser can advise on.  This will probably be the most time consuming task and you need to leave time to make sure this is set up in time.

At your staging date and beyond

  1. Assess and enrol your staff – formalising the assessment you made before (at No #3) and providing information to the pension provider
  2. Write to your staff – within 6 weeks of the staging date staff letting them know their status and what the options are – there are 3 standard letters which can be completed
  3. Your ongoing automatic enrolment duties – mainly keeping the employee records and options they have chosen
  4. Complete your declaration of compliance – an online declaration confirming the employer duties have been complied with

There are 3 classes of employees who need to be considered:

  1. Paid upto £486pm – they can ask to opt in to the scheme but you do not need to make any contribution
  2. Paid £486 – £833pm – may ask to join the scheme and you need to make contributions
  3. Paid more than £833pm –
    1. Aged 16-21, or over retirement age – have the right to opt in as No #2
    2. All other employees are automatically enrolled unless they ask to opt out

If all employees opt out you still need to complete all of the above steps and set up a scheme despite no contributions are made.  This is a brief summary of the steps to be taken by employers and full requirements are covered in the Pension Regulator website (links above) and you should seek professional advice before taking any steps based on the contents. If you would like advice in this or other areas feel free to call. Alastair Wood, AW Accounting, Gravesend, Kent – Accountants who “speak your language”