Employers are required by law to automatically enrol all eligible employees into a workplace pension and make a contribution to it. Employers will be given a date from which they must automatically enrol their employees – known as a ‘staging date’ which is determined by the number of employees under a PAYE reference as at 1 April 2012. Should employers have more than one PAYE reference the earliest date will be taken.
In some instances the staging date will still seem like some time away but employers need to focus on these now and without delay, to ensure they are able to meet their auto enrolment responsibilities, avoid possible penalties, plan appropriately and to allow time for the provider to set everything up. Besides knowing when their staging date is, employers also need to review any existing pension arrangements as it is unlikely they will comply with the new requirements.
In addition, it would be prudent to:
Ensure those responsible for preparing payroll (internal or external) understand and are able to implement the changes and that the software used is able to cope with the added requirements.
Assess the implications of auto enrolment for the business in financial terms e.g. calculate the level of contributions the business will be obliged to make.
Forward planning will enable employers to fully understand the implications of auto enrolment and cost to their business. It will also allow employers to plan for when these costs will need to be covered and provide scope for planning its implementation with greater efficiency.
Auto enrolment should also be factored in to other business decisions e.g. if employers expand their business, they will need to factor in the cost of ultimately needing to provide a minimum 3% employer contributions for the enlarged workforce.
It may take time to set up a suitable scheme to meet the business’ obligations and the sooner the process begins the more time employers will have to consider their options and to select the most appropriate arrangement for their needs.
Even with professional guidance, it may take a year or more to ensure that employers meet their auto enrolment obligations in a way that will satisfy the needs of the business.
Call us today to discuss your business requirements on 0845 828 1000 or email one of the M&H Financial Planning team.
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