Although businesses in the UK have had a few years to get used to the concept of pensions auto-enrolment, some confusion remains: what is it, how does it work, what does it mean for me? And that confusion is often mirrored by employees themselves, who are sometimes left unsure as to what commitments they have made to saving for retirement.
Auto-enrolment was introduced in 2012 in response to changes in the pensions market – there was growing concern that not enough people were saving enough for retirement. The solution was simple: every employer of staff normally working in the UK was required to put their qualifying staff into a workplace pension scheme and to make contributions towards their employee’s pension. There are resources out there to help companies that are new to the system.
The largest companies (most of which already had schemes in place) were the first to be ‘staged’ into the system, followed by the rest of the UK’s businesses on a sliding scale towards the smallest.
Since then, companies have had a duty not only to fully comply with the rules but also to make sure employees understand their rights and responsibilities. They must also offer a clear and simple way for those who would rather opt out of the scheme to do so.
In essence, getting up to speed with auto-enrolment has four key steps: choosing a pension scheme; assessing which staff should be included in it; communicating this with the workforce, and finally declaring your compliance with the necessary rules.
But – and this is important – auto-enrolment is a story without end: every eligible company must stay up to date with the requirements. For most, that means complying with a process is called Cyclical Re-enrolment, which is required every 3 years by law. Put simply, it is designed to ensure companies offer all of their employees the chance to join the scheme, leaving no employees out. For a handy guide, ask yourself the following questions:
- What is your initial assessment: who’s eligible?
- System check: does your software comply with HMRC rules?
- Are you fully aware of your statutory communications obligation?
- Are you ready to enrol newly eligible employees?
- Have you paid the correct contributions to your pension provider?
- Did you complete and file a declaration of compliance?
- Does your team know how to manage opt-ins and opt-outs?
- Are your records up to date? Have you registered with The Pensions Regulator (TPR)
- Have you chosen a compliant provider with the right pension plan?
- Have you set up a triennial employee assessment?
Employing people in the UK requires adherence to a number of laws and guidelines but it needn’t be too much of a headache if you have the right help. For many smaller companies, this date may be rolling around soon as the first wave of smaller companies approach their renewal period.
At Paul Beare Ltd, we can handle the compliance aspects of your pensions auto-enrolment obligations, as well making sure your payroll systems are kept up to date, reflecting your obligations to the employees in the scheme.
For more information, please get in touch, and we can help.