Phil Thompson, head of BPIF Business, takes you through the seven steps to prepare for automatic enrolment.
Workplace pension law is changing and every employer will have to act to fulfill their new legal duties. The details of the changes are still being clarified, but there are things that your business should now be doing to make sure that it is in the best possible position to be able to respond to whatever these may be. The following seven points are a guide to the sort of information your business should be collecting and acting upon. Pensions are being reformed; you will have a responsibility to make sure that your business can adopt them.
Know your staging date
Your staging date will be based on the number of persons in your PAYE scheme on 1 April 2012. Your first step should be to check this information, and obtain a comprehensive list of the possible staging dates by PAYE scheme size plus staging date time bands for employers with fewer than 250 persons in their largest PAYE scheme.
There is also information available for employers with more than 1 PAYE scheme, multiple employers that share 1 PAYE scheme, employers that are part of complex corporate or group structures, identifying the staging date in the case of company takeovers and mergers, employers that do not have a PAYE scheme.
Assess your workforce
You will need to be able to identify any ‘eligible jobholders’ working for you. In addition to eligible jobholders, there are other types of worker, ‘non-eligible jobholder’ and ‘entitled worker’. You will need to be able to identify whether you have such workers. If you do, you will have employer duties in relation to them.
Review your pension arrangements
You might have an existing scheme that you can use or adapt for automatic enrolment, or you may need to set up a new one. You must assess whether your existing scheme is a qualifying scheme that you can continue to use for existing members who are eligible jobholders and the criteria a scheme must meet to be an automatic enrolment scheme. It is important that the pension scheme you choose will deliver good outcomes for your workers’ retirement savings.
Communicate the changes to all your workers
There are different information requirements for each category of worker. You must know what Information you must provide for each type of worker, what generic information you must provide to all workers, timescales for providing the information, the ways in which you can provide the information.
Automatically enroll your 'eligible jobholders'
There is a process you will need to follow to automatically enroll the eligible jobholders you have identified. You will need to know how to do this plus what information you must provide to the person and to the scheme you are enrolling them into, when to automatically enroll and ongoing responsibilities once automatic enrolment is completed. Workers who have been automatically enrolled have the right to ‘opt out’ of pension saving. You will need to know how to process opt-out workers who want to leave a scheme. There are also rights for workers to join a pension scheme outside of automatic enrolment and what you will need to tell them.
Register with The Pensions Regulator
You are required to register your scheme shortly after you’re staging date. Registration will be a straightforward process that can be completed online. You will need to keep detailed records in relation to your workers and your pension scheme.
Contribute to your workers' pensions
You will be required to make ongoing contributions to your workers’ pension scheme. The minimum contribution amounts are set out in law and will be increase gradually. There are certain things the employer must not do, both before a person starts working for them and once that person is a member of a pension scheme with that employer. Auto-enrolment is not an option but a process each employer must follow and there are fines for those who delay.
For further information you can contact Phil Thompson or his colleague Steve Walker at BPIF Business.