Well, we all know why auto-enrolment was introduced.
Not enough of us were saving into a pension plan and those that were, weren’t saving anything like enough to fund their retirement. So, it’s not surprising that in 2012 the government decided to change pension rules, and introduce auto-enrolment. Auto-enrolment makes it compulsory for employers to offer qualifying employees the option of joining a workplace pensions scheme. But that doesn’t make it any less of a headache, does it?
Over the last five years companies from the largest to the smallest (even just one employee) were given staging dates to start workplace pensions. From October 2017, your auto-enrolment responsibilities will start at the same time as PAYE responsibilities.
Any employee who is between 22 and the State Pension age (let’s not start of that subject here!), earns over £10,000 a year and works in the UK, must be enrolled.
At the moment the minimum contribution is 2%, (1% from employer). But this will rise to 5% in April 2018 and then 8% in April 2019 (of which employers will pay at least 3%).
The process is fairly straight-forward; you must:
- Assess who qualifies for a workplace pension
- Enrol qualifying employees on your scheme
- Write to them to inform them
- Manage opt outs (Employees may choose to opt out and that is allowable, however employers must not encourage or force their employees to opt out.)
- Declare your compliance.
However, your duties do not stop there. You must continue to assess your employees, enrol and manage opt-outs regularly. In addition you are obliged to re-certify every 18 months and then there’s automatic re-enrolment every three years (when any employee who opted out, is re-enrolled). Yeah, alright, it is a bit complicated!
Penalties can be applied for any instances of non-compliance, so it pays to make sure that you are compliant.
Still not sure? Your accountant will be able to advise you and manage some of the duties if you prefer.
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