Top 5 tips for auto enrolment

Auto enrolment, workplace pensions, these may well be terms that you have heard increasingly on TV adverts, radio stations and newspapers; notably on TV with people such as Karen Brady and Theo Paphitis stating that ‘They’re all in’.

The Pensions Regulator recently started writing to all employers telling them when they must comply by and this is known as their staging date. These letters are still being sent out and, to all businesses and you should have received yours by the summer of 2015.

1) “I don’t want to do it, it doesn’t apply to me so I’ll just leave it”

2) “When should I start planning for auto enrolment?”

In many cases it cannot and there may be costs to enable this option. Alternatively, if a pension provider does not see it as profitable to them, they will simply tell you that you must go elsewhere for a suitable scheme. Allowing time to liaise with pension providers is a key feature in the process and can often take time to resolve. Another problem here may be your payroll. Some software requires that you input the pension details 2 months prior to your staging date, this means that the scheme must be set up and in place at this point.

There are four different methods to base your contributions on. The first, and most popular is Qualifying Earnings. This includes everything such as holiday pay, overtime and statutory sick pay between a band of £5,772 and £41,865 (2014/2015). The contribution levels for an employer can be phased from 1% depending on your staging date up to 3% by the 1st October 2018.

4) “What’s the cheapest scheme out there? That is the one I want”

With the new auto enrolment legislation, an employer must assess the workforce each pay run and communicate with their chosen pension provider anybody who has been enrolled into the scheme and what contributions need to be paid for each member. This process is typically done within payroll, however you must ensure that your payroll software will allow it, what they will charge for it and how long it will take.

5) “I don’t have time to stop and tell the workforce about it”

Certain communication to staff is a compulsory part of auto enrolment and not sending this out can result in fines from The Pensions Regulator. One of your employer duties is to communicate with your employees and promote participation in the scheme, and for this reason we suggest sending more than just the compulsory communications.

Many of our clients have taken up different services, some choosing to receive full advice and recommendation for the most suitable workplace pension scheme for their business, other choosing for us to help to set a scheme up and implement the data into their payroll software. We have also offered an ongoing service, supporting them with any employee queries, uploading their files to pension providers and carrying out a full annual review to ensure that the scheme remains suitable for their business.

Another popular service is our presentations to staff, communicating directly to them about what auto enrolment is, why it is here and what it will mean to them. This means that any questions they have can be directed to a Financial Adviser, rather than the employer who may not necessarily be able give a response. Auto enrolment has quickly become a minefield, and not one to be tackled half-heartedly. Our biggest tip, do not underestimate auto enrolment, it will not be disappearing so make sure that you are prepared and you understand the consequences of your decisions for your business.