700,000 small employers will be reaching their Staging Date for pension auto enrolment in 2017. That is 200,000 more than the number who had to set up their pension scheme in 2016. Setting up an auto enrolment pension scheme is proving challenging for businesses. There are so many options to consider and if you are doing it for the first,and probably only, time it is more than a little daunting.
We have set up a large number of schemes for businesses since Autumn 2015 and whilst we have experience it does not get easier. As well as choosing a compliant pension scheme employers need to decide whether deductions are to be made from total earnings or qualifying earnings and whether deductions are to be from net pay or gross pay. These decisions will depend on which suits the majority of employees best as lower paid workers could be worse off if the wrong choice is made when the scheme is set up. It is helpful to talk this through with someone who understands the questions.
Not all payrolls are straightforward and we have been faced with some challenges. It is therefore important to start getting your pension scheme organised now so that you leave enough time to deal with any issues which may arise. Even if you think everyone will opt out of the scheme you still need to have one in place unless the only people in your payroll scheme are directors. Even then there are specific criteria those directors need to meet for an auto enrolled pension scheme not to apply to them.
If you do not need to set up a scheme you will still need to advise The Pension Regulator of the reason why. And if you don't need to set up a scheme now as soon as you take on your first employee you will have four weeks to set up a scheme, provide them with details of the scheme and auto enrol them in to it if they are eligible.
Auto enrolment is an ongoing process. As an employer you must remain compliant by making the correct deductions from your employees pay every pay period, by submitting and paying the employees' and employers' contributions to the pension scheme, by corresponding with every new employee about your pension scheme and their eligibility to join it and by auto enrolling every employee who has opted out back into the scheme every 3 years.
We already know that managing this ongoing compliance requires a lot of organisation and administration. Remembering to write a letter to your new employee, remembering to take them off postponement at the end of their three months probation, ensuring that deductions are made correctly from their pay and not from any non pensionable pay, repaying deductions to the employee when they have opted out and keeping a record of when employees need to be opted back in to the scheme are just a few of the things to remember. And don't forget the Declaration of Compliance! You have 5 months from your Staging Date to complete your Declaration of Compliance and we think this will be the thing that many people will forget as it is such a relief to have got everything in place and running smoothly that that final step is just not on the radar.
We have a lot of experience of setting up pension schemes and running payroll. The two go hand in hand. So if you are finding setting up your pension scheme a minefield of confusing information or you just don't have time to think about it we can sort it all out for you. We will support you every step of the way until your scheme is up and running and our fee includes support through your first month as we want to make sure you know and understand what you need to do. And we can help with your payroll too.
Contact our Auto Enrolment Administrator, Karen Reynolds, who will give you more information about how our auto enrolment administration service will give you peace of mind and ensure you are compliant.