Why businesses must act now?
So you’ve seen the adverts on TV talking about the workplace pensions? You know, the one with the big fluffy monster! But you haven’t done anything about it as yet!?! Well here’s some cautionary advice to sway you to implement a pension scheme and stop you being caught by the pension regulator aka the purple monster.
The initiative of the automatic enrolment, also known as auto enrolment, has come about from the government. This is in a bid to help people save for later on in life and help those who are not saving enough for their retirement, through offering a pension scheme in the workplace.
In 2012, the new law came into play for larger businesses to ensure that all their employees in the workplace had enrolled in a pension scheme. While the scheme is being rolled out in a phased approached by 2018, this will apply to all employers, no matter how big or how small you are. If you employ one or more members of staff, you have a legal duty to ensure you enrol your employees. If not, the purple monster will be hot on your tail!
It’s compulsory and applies to all
The automatic enrolment changes are compulsory, you must automatically enrol all your eligible employees. If you’re not sure on where you stand, there is plenty of information out there to help. Why not look at the employer section on automatic enrolment on the GOV.UK website that will provide you with more information.
Who will be automatically enrolled?
It does not matter about the type of work your employees do or whether they work full-time or part-time. As an employer, you must enrol your employees in a workplace pension scheme. Here are some quick pointers regarding eligibility.
- The employee must not already be in a suitable workplace pension scheme
- The employee must be at least 22 years old, but under state pension age
- The employee must earn more than £10,000 a year, tax year 2016-17
- The employee must work in the UK under with a contract of employment
Do employees have a choice about being enrolled?
Yes, if your employees already have a workplace pension, they do not need to join your scheme. They can opt out of your workplace pension scheme after being enrolled but will lose out on both employer contributions and government contributions in the form of tax relief. There are more exemptions on the sites that we have advised you to visit within this blog – so do take a look in more detail.
Make sure you are part of it
Your business will have a date that auto enrolment must be in place by, this is called a staging date. All employers must have a workplace pension scheme set up no later than 2018. If you are unsure about when your staging date is then visit the pension’s regulator – all you need is your PAYE reference number to hand. If you fail to set up the workplace pension and enrol your eligible employees, the pension’s regulator will enforce the law and issue a fine. Some employers who have failed to meet their staging date have already been fined! However, they are there to help you too, so if you’re not sure on what you need to do they are happy to provide information and guidance to help you meet your legal duties as an employer.
You need to know what your staging date is and have a workplace pension set up by this date. You must also auto enrol all of your eligible employees by this date. If you fail to do so, you will be fined. Make sure you’re covered, don’t get caught out!
In addition, by being compliant you will be protecting your business from any fines and protecting your employee’s financial welfare. What have you got to loose, apart from the purple monster gobbling you up!
Concerned or unsure, why not get in touch with the pension’s regulator, to find out more.
Found this blog interesting; why not take a look at our other HR blogs http://www.aspirecambridge.co.uk/blog/