AUTOMATIC Enrolment is Pensions Minister Steve Webb's ‘quiet revolution’.
But according to software company Sage, things may not be so quiet for Basingstoke businesses in the coming months.
Automatic enrolment will affect every business in the UK, and from April 1,2014 to April 1, 2015, businesses with 50-249 employees will need to enrol all employees over the age of 22 and earning more than £9,440 each year into a pension scheme.
Now is the time to make sure everything is in order. Smaller businesses who will be staging next year also need to prepare– we recommend 18 months for businesses to have enough time to train staff and chose the right pensions provider.
To help businesses prepare, Sage have put together some tips to bear in mind:
Find your staging date and appoint your TPR (The Pensions Regulator) contact within your business.
The larger the company, the earlier a business stages, and the majority of small businesses will stage in 2014 and 2015.
The Pensions Regulator, as the name suggests, will be regulating the scheme and each business must make sure they have identified someone to handle all communication with this organisation well in advance.
Speak to your payroll provider and find out how your software will deal with auto enrolment.
Many will offer an enhanced system to make compliance easier, and it is important to find out ahead of time what the system will offer.
Key questions to ask your payroll provider include:
What are you doing for auto enrolment?
What additional support will you provide?
When will your software it be ready?
Have a qualifying pension scheme offering.
Employers need to make sure that they have a qualifying pension scheme set-up in advance of their staging date so that they can start to enrol their jobholders.
Without this scheme in place you will not be able to begin enrolling your eligible employees, and will miss your specified staging date.
Employers who miss their staging date could be fined.
You also need to ensure they are giving you what you require and find out exactly what services they provide and how/if they will communicate with your payroll provider.
Appoint your auto enrolment team.
Auto enrolment requires someone to take responsibility for the scheme within your company and oversee the process.
You also need to be clear who is taking responsibility for the day to day administration of the scheme.
With so many elements to the scheme it is vital to have a dedicated team in place early to ensure a smooth transition.
Develop your auto enrolment action plan.
When you have ensured you have the right contacts in place and your software will fully support your transition, you need to develop a plan, ensuring you understand the key dates ahead of your staging and are aware of what you need to communicate to your employees well in advance.
Know the cost.
The amount of money to be paid by a worker, and their employer, will be calculated as a percentage of their ‘qualifying earnings’ namely, gross earnings more than £5,715 up to a maximum of £38,185.
So for example, for a person who earns £19,000 a year, the percentages would be calculated from the difference between £5,715 and £19,000, which is £13,285.