2015 will be a crucial planning time for smaller and mid-sized businesses as the new workplace pension rules – known as pension auto-enrolment – start to bite.
Clayton & Brewill’s pension auto-enrolment specialist Chloe Hughes urges employers to get their plans in place early to ensure they can mitigate the financial and management impact on their business.
‘The chart above takes statistics from The Pension Regulator and shows just how many businesses will be expected to ‘stage’ each quarter of the year over the next three years. By ‘staging’ we mean enrolling all eligible employees into an approved workplace pension scheme – and this clearly isn’t something that can be done overnight.
‘All employers will be affected by the end of the process, including those that are newly established businesses and those with just one person on the payroll.
‘The aim of auto-enrolment is to encourage individuals to save for their retirement and, under the regulations, all businesses will ultimately need to make a minimum pension contribution of three per cent per eligible employee. At Clayton & Brewill we strongly recommend allowing at least 12 months to prepare so that you can have sufficient time to find an appropriate pension scheme, assess and consult with your employees and make sure your payroll systems are up to scratch!’
How should I prepare my business for pension auto-enrolment?
- Know your staging dates! Visit the pension regulator website to find out your staging date. If it's less than 12 months away you should have already had a letter from the regulator.
- Plan early if you want a choice of pension scheme. With many schemes filling up quickly, businesses need to be talking to pension providers at least 12 months before their staging date.
- Do your workforce due diligence as early as possible. Make sure you have employee contact details, including an email address where possible, date of birth and national insurance number. And work out a method for keeping this up to date.
- Check that your payroll software can cope. Plan for a 'parallel payroll' the first time – Dunelm paid the price for system failure with a hefty non-compliance penalty!
- Consult early with your employees and allow them to plan ahead for the change in their take home pay.
- Update your whistle-blowing policy. The regulator can impose hefty fines for non-compliance.. make sure you are the first to know of any problems!
- Make sure you know whom you employ.. Sounds simple but hink about anyone on long-term sick or employees on remote sites.
- Bring forward the cut-off date for commission and overtime notifications. Payrolls will take longer under auto-enrolment.
- Take control of the situation by planning early. If you rely on the NEST scheme you will get no help with administration or employee communication.
- Use your pension scheme as an incentive to help you recruit good people.
Can I delay my staging date?
Your business will need to stage on the date set by The Pension Regulator but you can delay making pension contributions for up to three months. This can be a useful way of bringing your workplace pension in line with your year end for example. Read more about postponing your staging date here
Clayton & Brewill has helped a number of employers to make a smooth transition to auto-enrolment. For a friendly conversation about your business and the new workplace pension rules contact Chloe Hughes on 0115 950 3044 or by email.