Is your business one of the 570,000 staging for auto enrolment from April?
Earlier this year, we reported that The Pensions Regulator estimated that around 570,000 small businesses will stage for auto enrolment between April 2016 and April 2017, is your business one of them? Here’s what you should know.
First things first, know your staging date. You can find your business’s staging date on The Pensions Regulator’s Staging Date Calculator. Your staging date is the date on which your business must begin complying with auto enrolment and making contributions to your employee’s pension schemes.
You can postpone auto enrolment by up to three months but it does not change your staging date. This option is usually used by businesses who may wish to align auto enrolment with their business or payroll processes. For example, your business’s financial year may run from February to February, but your staging date is in January, in this instance you would more than likely prefer to delay the start of auto enrolment by one month, so that everything runs simultaneously.
The message from The Pensions Regulator is to begin preparations at least 12 months in advance. This is simply because a lot of businesses underestimate the level of work which needs to go into setting everything up correctly, and by preparing early, you’re giving yourself a better chance of compliance.
Assess your workforce
To be enrolled, a worker must be over 22 years old, earning over £10,000 per year, and be based mainly in the UK. If a worker falls outside of these rules, they can opt-in to your pension scheme by giving notice. You cannot legally discourage a worker from joining your pension scheme.
Additionally, employees must assess their workforce each pay period in case their circumstances change. For example, if an employee earns just under £10,000 per year, but at some point in the year earns a bonus or commission and this takes them above the earnings threshold for the year, that employee should be automatically enrolled from then onwards; providing they are over 22 and based in the UK. If you are unsure about this, we’ve written a handy guide to auto enrolment which you can download for free here.
Employers must also communicate their intentions with auto enrolment and any changes to how the company manages it, and keep a record of these communications for any potential audit from The Pensions Regulator or another third party.
The Pensions Regulator has a range of options if they identify that a business is not complying with auto enrolment after their staging date. You could be handed a £400 fixed penalty notice which can rise with a daily rate of anywhere between £50-£10,000 depending on how many staff your business has. Additionally, long-term non-compliance could be dealt with through court action.
We recently met with Bryan McDaniel, Industry Liason Manager at The Pensions Regulator to update us on the latest workplace pension reform compliance and enforcement news and figures, you can read more about Bryan’s visit and what he had to say here.
If you’re unsure what to do, speak to us today about your options with auto enrolment. IRIS offer the industry’s leading auto enrolment software solution, the IRIS AE Suite™. Developed through close relations with The Pensions Regulator, the IRIS AE Suite™ is the complete auto enrolment solution, speak to us today about how it can work for your business and book a free, no-obligation product demo.