Auto Enrolment - Are you ready?
With a name like “automatic enrolment”, it’s far too easy to just assume you don’t have to do anything: it’s automatic, isn’t it?
By Lancaster District Chamber of Commerce.Don’t be deceived. Automatic enrolment is set to affect all employers in the UK, with some hefty financial penalties for those who fail to comply with the new legislation. Research by NEST has already shown that 20% of companies have taken over 16 months to get ready, and 66% of employers found making the changes far more difficult than expected. With the changes being implemented on a staged scale until 2017, it’s crucial for businesses to learn everything they can about the scheme now.
In a nutshell, automatic enrolment means employers have to enroll every eligible employee into an approved pension scheme if they aren’t already in a pension scheme. This includes workers aged 22 to state pension age, who work in the UK, and who earn over £9,400 a year. While people in this category are automatically enrolled, they have the choice to opt out. Likewise, anyone who doesn’t fit the eligibility criteria has the choice to opt in anyway.One of the key features for businesses to note is the hefty financial penalties if they fail to comply. This works on an escalating scale, so a non-statutory notice can snowball into £50- to £10,000-per-day fine if companies don’t act. Employers who purposefully and persistently fail to comply with their duties will also face criminal conviction. Business owners will know too well how unnecessary expenses can floor a company’s finances, so it is critical for employers to colour between the lines.
Not anticipated in the government literature is the potential conflict between employers and employees. Employers now have to pay a minimum percentage of the pension contributions, but are simultaneously banned by law from encouraging workers to opt out. Any differences in opinion or interests could consequently make things incredibly awkward, particularly for businesses who lack access to a robust HR and employment law service.On the plus side, employers are also required by law to explain what precisely automatic enrolment entails to their employees. While this is yet another administrative inconvenience, this at least encourages an ethos of transparency between workers and employers. To return the favour, it is important for employees to be fully forthcoming about their information, especially as collecting correct data will be a major asset in avoiding company fines.
Above all, the best course of action is to plan now to avoid being hit hard. The Pensions Regulator website allows you to find out your staging date, and their action plan tool breaks down everything employers need to do between now and then.Employees can start by finding out if they are eligible or not: if so, you need to review whether you wish to opt out or not. If you’re not going to be automatically enrolled, you will have to start considering if you want to opt in.
If you want to consult the experts, Holdens Solicitors, working in association with Leigh Astin of Chase de Vere Financial Advisers, and the Lancaster District Chamber of Commerce can help your business in an impartial manner. They are currently offering an initial consultation and diagnostic discussion at no cost or obligation on auto enrolment to any business, so employers can receive appropriate and comprehensive advice on every legal aspect of the changes.The Lancaster District Chamber of Commerce is a not-for-profit organization that helps make local businesses prosper. After the success of their recent automatic enrolment seminar, the Chamber have plans to host future meetings to help businesses get to grips with the new pensions regulations. Following that seminar, the following comments were received from delegates who attended:
‘A well presented, informative seminar showing what our company must do to comply with Auto Enrolment… Sarah Mounsey, Craven Concrete‘The Auto Enrolment seminar was very well put together. We had queries explained from a delegate’s perspective. As a payroll bureau, we need advice to help our clients set up their pension scheme. Live examples were provided, showing how savings can be made. We gained invaluable knowledge showing why at least 6 – 12 moths planning is essential. As a result of the presentation, we have requested a follow-up appointment.’ Josie Smith, Accounts Matters
With a plethora of new pension regulations coming to businesses soon, it certainly pays to play it safe.
