The Pensions Regulator Guest Blog: Small employers are not to ignore the workplace pension
The Pensions Regulator is warning small and micro employers not to ignore the workplace pension.
Workplace pensions law means all employers must assess all staff for automatic enrolment and put those who meet certain criteria into a workplace pension scheme and pay contributions into it.
Currently more than five and a half million staff have already been put into a scheme by the UK’s large and medium employers, but the vast majority of small employers have yet to reach the date their automatic enrolment duties start – this is called their staging date.
During 2016, around half a million small and micro employers will reach their staging date. For many of these employers, meeting their new workplace pension duties represents a cultural change – it will be the first time they have provided a pension for their staff.
A monster of a campaign to grab your attention
The Workie character and the ‘don’t ignore the workplace pension’ message of the joint DWP/TPR advertising campaign launched last year tells employers that workplace pensions have changed and implementing automatic enrolment is the law for every employer.
Step by step guide
Along with our advertising campaign, we also launched a refreshed step by step guide. The guide is designed for employers who may not have pensions experience and shows them clearly what they will need to do and by when. Employers should start by using the duties checker which tells them which duties apply to them, for example whether they have staff they will need to put into a pension scheme. Completing the duties checker means an employer receives communications from the regulator which is suitable for their circumstances.
Employers will be able to implement automatic enrolment by themselves using the step by step guide, but many will decide to ask a business adviser to help them with some or all of their duties. Employers should ensure they understand what services their adviser is offering and what they will be responsible for so that important tasks are not missed.
Understanding which staff need to be put into a pension
Workplace pension duties mean all employers must assess their staff to check if they will need to put them into a pension scheme and they should ensure they leave plenty of time to do this. Staff who are over 22 and earn more than £10,000 per year (or more than £833 per month or £192 per week) are eligible and will need to be put into a scheme. Employers must tell all of their staff about automatic enrolment, even if they are not eligible to be enrolled. If they do not have staff to put into a pension scheme, employers should not set one up. They should however have a pension scheme in mind incase their staff become eligible or they choose to opt in.
Ensure the pension scheme and payroll solution are compatible
Employers who do need to set up a pension scheme should have one in place six months before their staging date. The scheme will need to be suitable for automatic enrolment, suitable for their workforce and it will need to be compatible with their payroll software.
Our website provides information on how to choose a pension scheme and on what functions payroll software will need in order to support automatic enrolment.
Completing the declaration of compliance
Five months after their staging date, all employers must complete an online declaration of compliance. They must do this even if they do not have staff they need to put into a pension scheme. The declaration is a legal requirement and shows the regulator what the employer has done to meet their duties. Failure to complete this task will trigger compliance action.
We’re here to help, don’t risk a fine
We understand that many small and micro employers are concerned about what they need to do to comply with the law and most want to do the right thing by their staff. We want to help employers avoid non compliance by giving them the information they need and alerting them well in advance of when their duties come into effect.
By far the biggest cause of non compliance is not leaving enough time. We write to all employers 12 months ahead of their staging date and employers should take action when they receive the letter which tells them what they will need to do and by when.
Guest blog from The Pensions Regulator. For more information, visit https://www.thepensionsregulator.gov.uk/en/employers
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