Workplace Pension Auto Enrolment
What is Auto-Enrolment?
The law on workplace pensions has changed. Every employer with at least one worker now has new duties, including putting those who meet certain criteria into a workplace pension scheme and contributing towards it.
This is called automatic enrolment. It’s called this because it’s automatic for your staff – they don’t have to do anything to be enrolled into your pension scheme – but it’s not automatic for you. You need to take steps to make sure they’re enrolled.
Does the change in law affect me and my business?
If you employ at least one worker, then yes, you’ll have to comply with the new law. All staff have rights and you have to advise them of their rights. If you have any workers who are over 22, under the state retirement age and earning at least £10,000 (in any pay period), you must automatically enrol them into a pension scheme, whether they want to or not! If the worker stays in, or wants to join then they contribute and so do you.
Here is a summary of the minimum contributions you and your employee(s) will have to make:
|Minimum Contributions||Employer||Employee (after tax relief)||Minimum Total Contribution|
|Up to Oct 2017||1%||0.8%||2%|
|From 1st Oct 2017||2%||2.4%||5%|
|From 1st October 2018||3%||4%||8%|
When will the change affect me?
Each employer has a date by which they need to comply with the law. This is called your staging date. Find out your date now with the HMRC staging date tool.
What do I need to do and by when?
There are a number of tasks that will need to be completed by your staging date, including assessing your workforce to see who’s eligible, choosing a pension scheme, and communicating to staff. To help you prepare use the HMRC automatic enrolment action planner to find out what you need to do and by when.
There is an option to opt out of this scheme, but that still requires a process to be undertaken.
Easy Accountants can help
All of this is potentially confusing and sounds costly. It can’t be ignored as the Pensions Regulator will levy fines (up to £500/day) for not complying with the law.
To help you plan for this please contact Easy Accountants and we can ensure that you and your business navigate through this as easily as possible.