Auto enrolment clinic: Know your duties
As the pensions regulator reveals that 2.9m people have signed up for auto enrolment workplace pensions, concerns are being expressed that insufficient savings are being put into the scheme.By John Hall, director of B&S Financial Management.
Pension managers have said that the minimum level of 1 per cent of an employee’s earnings was being contributed by between 66 per cent and 90 per cent of employers.Many employers are making the least possible contribution because pension bills are rising but if this trend continues, there’s a risk that many workers face being greatly disappointed by their level of retirement income.
There’s a significant administrative burden to auto-enrolment and if employers don’t comply with the new requirements they could face a fine which increases commensurate with the number of employees.For example, you need to:
- Assess which employees are eligible – there are three different categories of worker;
- Communicate the right information at the right time (to the right people);
- Manage the payroll (dealing with employees who opt out, new employees and employees who move from one category of worker to another);
- Establish thorough record keeping (a business could be audited by The Pensions Regulator at any time);
- Choose a pension plan and make decisions about which investment choices to offer.
Consequently, it is essential that employers prepare for their auto enrolment duties well in advance of the staging date:
- Find out your staging date if not already known;
- Assess your workforce;
- Check what services/facilities will be offered by your payroll provider;
- Liaise with your current pension provider to check whether existing arrangements comply with auto enrolment requirements;
- Speak with your financial adviser.