The biggest change to pensions for a generation began in October last year and the first year of auto-enrolment has seen significant milestones with almost 2 million workers having now been put into a pension scheme by their employers. Under a 5½ year staging process, employers must enrol eligible job holders into a qualifying pension scheme or the National Employment Savings Trust (NEST) unless they are already members of a qualifying scheme.
What this means in practice is that the new duties will eventually apply to all employers in the United Kingdom. The date upon which an employer becomes subject to the new rules and duties (referred to as its “Staging Date”) depends upon the number of employees in the business. Many employers have not therefore been affected although experts suggest that an employer should start their initial planning 12 to 18 months in advance of the appropriate Staging Date.
To ease the compliance burden, Staging Dates for small businesses have been delayed so that broadly speaking employers with between 50 and 249 workers have been assigned revised staging dates running from 1 April 2014 to 1 April 2015. Employers with fewer than 50 workers have been given Staging Dates between 1 June 2015 and 1 April 2017.
Employers will be required to provide information to job holders about auto-enrolment, including details of the pension scheme they are using and the right to opt-out.
Contributions need only be made for workers who are active members of the scheme.
It is therefore essential that employers plan and there are a range of things that need to be considered including the following:-
Which provider to use;
Who will administer the opt-out/opt-in process;
Whether you wish to set up a scheme in advance of your Staging Date to reduce complexity later;
The most cost effective option taking into account Staging Date, communication costs, payroll costs and administration fees;
What contributions to pay and whether any payroll provider will undertake your assessment
All employers therefore need to take note as the answers to these questions and others will significantly impact upon the costs of complying with their obligations under the auto-enrolment regime.
At hlw Keeble Hawson, we can of course advise you on the law and your obligations and can put you in touch with specialists and experts who will guide you through the maze of implementation to ensure that you do not fall foul of the new Rules.