Financial Advisors based in Lancashire
The law on workplace pensions has changed to make it easier for people to save money for their retirement. Automatic enrolment means every employer must automatically enrol eligible staff into a qualifying pension scheme. This will have far more impact than the previous Stakeholder pension scheme, as employers have to contribute to their employee’s pension scheme and there are high penalties for those who miss their auto-enrolment staging date or have inadequate records.
Pension providers are already warning that they will need possibly up to a year’s notice to bring in a scheme, due to the number of firms who have to auto-enrol over the next two years. For many small to mediums sized businesses, this can present a challenge.
From the initial implementation of a pension scheme, registration with The Pensions Regulator, on-going maintenance and compliance requirements, we can help you every step of the way.
Auto enrolment is being phased in gradually, with the largest businesses beginning in October 2012. Your start date for auto enrolment, known as a staging date, will depend on the number of employees in your PAYE scheme.
All businesses with more than 250 employees are already expected to be compliant. Smaller businesses are being phased in gradually until April 2017.
Finding out your staging date
In order to comply with the new pension reforms, employers will have to:
- Provide a qualifying pension scheme
- Automatically enrol eligible employees
- Make employer contributions
- Tell staff about auto enrolment
- Register with the Pensions Regulator.
If you already have a defined contribution workplace pension scheme you need to check with the Pensions Regulator if you can use it for auto enrolment.
If you already run a stakeholder pension you still have to run it if your existing members want it. However, you don’t have to offer it to other workers.
Who is eligible?
You must automatically enrol all staff who are:
- Between 22 and state pension age;
- Working in the UK; and
- Earning more than £9,440 (for the 2013/14 tax year).
Some staff who don’t meet the criteria can also opt in to auto enrolment. If they choose to opt in, you have to enrol them.
Auto enrolment requires employers to make a minimum contribution, which is a percentage of an employee's qualifying earnings.
Until September 2017, the minimum contribution is two per cent with at least one per cent coming from the employer. The minimum employer contribution increases to two per cent in October 2017 and three per cent from October 2018.
You need to write to all staff to tell them how they are affected by auto enrolment.
Staff can choose to opt out of your pension scheme after they have been automatically enrolled. Those who want to opt out will have to complete a form from the pension scheme provider and give it to you.
Once you've set up your pension scheme you need to register it with the Pensions Regulator and provide details of your pension scheme, including the number of people enrolled. This can be done online at the Pensions Regulator website.
NEST (National Employment Savings Trust) is a pension scheme set up by the Government and is designed to help employers meet their auto enrolment obligations.
Employers are free to choose which qualifying scheme they use but the NEST scheme is specifically designed to help smaller employers meet the requirements of auto enrolment.
Contact us to discuss your legal obligations for auto enrolment.
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