AUGUST 2015 - Are you prepared for Auto enrolment?
The pension landscape has changed dramatically – and so has the legislation. While the major companies have moved into auto enrolment, the bandwagon is now moving to the smaller and medium size companies which must prepare for the arrival.
Every employer with at least one member of staff now has an obligation to be enrolled, which is why I would encourage firms to build a team of internal and external resources to prepare for auto enrolment – it’s coming, so there’s no point in directors burying their heads in the sand. Rather, they need to have a strategy and a time frame in place to ensure that it is properly set up.
The date when automatic enrolment begins is known as the staging date and firms must undertake a number of duties to comply with this, including choosing a pension scheme. It is then a case of enrolling all staff onto these schemes.
Eligible jobholders are aged 22 and over and earning over £8,105 a year, while non-eligible jobholders are aged between 16-21, earning less that £8,105, and those aged 16-74 earning above £5,564 but less than £8,105.
The Pension Regulator advises that there is a 12-18 month preparation period so companies should give themselves plenty of time before the staging date to prepare for auto enrolment.
How should you prepare? Firstly, you need to choose and set up a pension scheme, ensure payroll software can communicate with pension software; communicate with employees and make a declaration of compliance with the Regulator.
Within a company, the HR department, payroll and finance departments need to be involved while, externally, the pension provider, payroll provider, financial adviser, accountant and employment law provider all need to be fully informed about the changes.
For further information, there is a useful step-by-step guide about auto enrolment on the Pensions Regulator website. www.thepensionregulator.gov.uk.