Planning for Auto Enrolment

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Auto Enrolment 1

Planning for Auto-Enrolment

What's the story?

Starting in mid-2015 nearly all employers with 30 or fewer employees will be required to have a workplace pension scheme. It is this requirement that the Government is imposing on businesses to which Auto Enrolment is referring.

Not surprisingly, the latest research that has been carried shows that many small businesses are unaware of the requirements of Auto Enrolment, or even when their Staging Date is (the date imposed on the employer by the Government for Auto Enrolling). Research shows that nearly half of all small employers aren’t aware of their obligations under Auto-Enrolment or even that there is a deadline for signing up.

How can you find out your staging date?

If you are still unaware of your staging date then help is at hand from The Pensions Regulator. If you have your PAYE reference number (you should be able to find it on your payslip) then click here, enter the ref number in the box and you'll be told your staging date.

Is anyone exempt?

If you are a one man/woman Company then you'll be exempt. Other than the one-man-bands you'll need to start getting organised.

What are the penalties for non-compliance

The fines are quite extraordinary (and not even tax deductible - read here)! Here's a summary of what you can expect to fork out for non-compliance:-

  • A fixed penalty notice of £400 for failing to enroll on time;
  • An escalating penalty of between £50 & £10,000 PER DAY depending on the number of staff you have for further non-compliance.
  • A penalty of between £5,000 and £50,000 for failure to make your pension contributions.
  • A penalty of between £1,000 and £5,000 for failing to comply with a compliance notice

Yes folks, it's no joke - failure to comply with the department of compliance's compliance notice will make you non-compliant. Compliance is everything.

So, you can see it's going to be in your interests to be compliant with this legislation because non-compliance can potentially put you out of business.

Actions to take

  1. Use the tool above to work out your staging date;
  2. Take some advice with regards to your qualifying pension scheme options and how your scheme is designed. Seek the advice of a financial adviser or employee benefits specialist who specialise in this area given that they can help design the scheme so that this is tailored to your businesses' needs and as cost effective as possible
  3. If you use your own payroll software ensure it is compliant before you start collecting and paying pension contributions from and for your employees;
  4. Make sure that you install payroll software updates promptly so that changes relating to auto-enrolment are in place by the time auto-enrolment applies to your company;
  5. If the rules look too complex for you call in a payroll bureau service or Independent Financial Adviser to assist you. It is worth exploring the other options available because there are many way to be compliant. You need to choose the right administration solution that suits your business.
  6. Don't leave it too late because the fines for non-compliance are way in excess of the cost of the solutions out there.
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