The top three challenges auto enrolment brings to small businesses
Payroll year-end has been and gone, and now we’re well into the 2016/17 financial year. The Pensions Regulator estimate that over 570,000 small businesses will stage for auto enrolment over the coming 12 months, but what have been the key challenges of auto enrolment for the 100,000 business who’ve staged since 2012, and will the next 12 months be any different?
What have the top three auto enrolment challenges been?
1. There still seems to be a lack of understanding surrounding the workplace pension reforms and the legislation in general. There’s a wealth of information out there for businesses if you’re still not up-to-speed with auto enrolment. In the first instance, check out The Pensions Regulator’s website to learn your staging date, your responsibilities and how to prepare.
2. Small companies tend to have employees earning under £10,000, and thus believe that as this is under the earnings threshold, they don’t need to do anything. Businesses must assess every one of their employees each time they are paid, and if an employee goes over the average, they must be automatically enrolled. For example, £10,000 split over 12 months is £833.33 per month; if an employee earns under that threshold for six months, but then in the seventh month works overtime or receives a bonus payment, and their earnings for then rise, even if this amount will drop again to below £833.33 the following month, they must be enrolled (or postponement should be used).
Put simply, the amount an employee needs to earn to be enrolled is worked out over an average of 12 months, and is not once their year-to-date earnings surpass £10,000.
3. Many businesses are unsure of the role the Declaration of Compliance plays with auto enrolment. The Declaration of Compliance is essentially a way of informing The Pensions Regulator that your business has now staged for auto enrolment and is compliant with the legislation. It is submitted on The Pensions Regulator’s website and must be done within five months of your business staging for auto enrolment.
If your business is yet to stage and you’re looking for some help and guidance on auto enrolment, our ‘Bite-size AE ’ webinars are perfect for you. Designed with small businesses in mind, the webinar offer an introduction to auto enrolment, the background, the legislation and the requirements it brings, all within a bite-size 30 minutes.
You can register for our next session this Thursday 21st April at 11:00. Registration is completely free and is quick and easy to do, book your spot today and get ahead of auto enrolment.
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