Pensions are being reformed, and given that it’s your responsibility to ensure your business is ready for the changes you had best be well prepared. Automatic enrolment is not an option but a process each employer must follow and there are fines for those who delay. Phil Thompson, head of BPIF Business, reports.
Your automatic enroling staging date is based on the number of persons in your PAYE scheme on 1 April 2012. The staging dates for companies with over 250 employees has already started. The next section, for companies with between 50 and 249 employees, will be between 1 April this year and next. 1 April 2015 - 1 April 2017 will see the automatic enrolment of those with fewer than 50 workers. New employees will need to start on the 1 May 2017 and this will be ongoing.
Assess your workforce
Even if you think your business will not be involved in the automatic enrolment until April next year or beyond, it’s imperative that you do some leg work now. For a start, you 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 need know whether you have such workers. If you do, you will have employer duties in relation to them and must respond accordingly.
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. This existing scheme may be 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 window, which allows eligible jobholders/non-eligible jobholders who have joined to also cancel the arrangement conditional to them doing this within a clearly defined timeframe.
There is a process you will need to follow to automatically enrol 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 enroling them into, when to automatically enrol and ongoing responsibilities once automatic enrolment is completed. Workers who have been automatically enroled have the right to ‘opt out’ of pension saving outside of the window mentioned previously but there will be some cost, so this will need to be defined clearly. There are also rights for workers to join a pension scheme outside of automatic enrolment and again, you will need to be clear on the information that you pass on to your staff about this.
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’ pension
You will be required to make ongoing contributions to your workers’ pension scheme. The minimum contribution amounts are set out in law and will increase gradually.
Safeguards in place for individuals
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. There are also clear rules with regards to recruitment dismissal, inducement or any other action that could be seen as unfair or detrimental to the rights of the worker.