A Guide to Auto-Enrolment
Posted 06 Mar 16
If you are a business owner who hires staff, you will need to familiarise yourself with the UK law which regulates the way your staff needs to be treated. One of the schemes you will need to apply to your workplace is auto-enrolment. This article is a guide to everything you need to know about it as a company owner.
What is auto-enrolment?
Automatic enrolment is the pension initiative for small businesses making it a legal requirement for all employers to automatically enrol their employees into a workplace pension and to make contributions to that pension.
Auto-enrolment was introduced in October 2012 and it applied then only to larger employers. However, it is predicted that by 2018 all employers - even those who hire only one person, will need to comply with the legislation.
Auto-enrolment was the government’s response to the increasing decline in employees saving pensions at their workplace. The scheme is used in hope to provoke people to save more, or to start saving for their old age.
The staging date by which you have to be compliant to auto-enrolment depends on the number of employees you had on the 1st April 2012 and your PAYE reference number. The simplest way to find out the date is by contacting your accountant or by visiting The Pensions Regulator’s website.
The Pensions Regulator will contact you at least 12 months before you’re affected by the legislation, however, we encourage you find out your staging date as early as possible.
As a business owner you will have a number of responsibilities in regards to auto-enrolment process, which include:
setting up and registering a pension scheme suitable for auto-enrolment
assessing all staff eligibility at every pay period
automatically enrolling and making contributions for all eligible jobholders
enrolling and making contributions for non-eligible jobholders who wish to join
managing the auto enrolment: including the joining and opt-out process
keeping records of how you have fulfilled your responsibilities
There are costs associated with auto enrolment you must make on a regular basis, including implementation, planning, payroll modifications, assessment, communications and record keeping. There are also the ongoing costs of the compulsory contributions you will need to make to staff pensions. These will depend on the average salary of members of the scheme and the contribution structure chosen.
Although the process of auto-enrolment can be daunting and complex, the key to successful management lies in good planning and the creation of a realistic strategy. The best and simplest way to approach auto-enrolment process is by hiring a professional and experienced accountant, like Tawanda Accountants, who will take the burden off you and ensure you never have to worry about the negative influence it can have on your budget. We will create the perfect financial strategy for your company which will allow you to keep your business strong while providing the best working environment for you and your staff. Contact us today to better your business.