RETIREMENT PLANNING: AUTO-ENROLMENT
NOTE: THE VALUE OF PENSIONS AND THE INCOME THEY PRODUCE CAN FALL AS WELL AS RISE. THERE IS ALWAYS A RISK THAT YOU WILL GET BACK LESS THAN YOU INVESTED.TAX TREATMENT VARIES ACCORDING TO INDIVIDUAL CIRCUMSTANCES AND IS SUBJECT TO CHANGE.
What Is Auto-Enrolment?
Auto-enrolment is the name given to the automatic enrolment of employees in a workplace pension plan. This is required for all employees that meet the criteria of the new legislation.
The term “automatic” is applied because the employee needs to take no action to become enrolled in the plan. As an employer, however, there are steps that must be followed within specific timelines to retain compliance with auto-enrolment requirements.
What Are the Business Obligations for Auto-Enrolment?
Every employer has an established “staging date” for compliance with the auto-enrolment requirements and has the responsibility to include all qualifying employees in pension schemes by that date. Failure to comply will result in strict penalties imposed by the UK government.
Every business must determine their staging date to evaluate when to get started with the preparation for auto-enrolment, which includes:
- Assessing the workforce to identify qualifying employees and determine how the new regulations impact your specific business.
- Determining the pension scheme that will be applicable to employees. Various options apply, including pension schemes that may already be in place.
- Administrative duties, including contacting the selected scheme to confirm the joining process and information required to include their employees.
- Data preparation – it is also the employer’s duty to gather all necessary personal information for employees so that they can be joined to the scheme by the required date.
- Enabling your payroll system to manage auto-enrolment requirements.
The Pensions Regulator estimates that employers should allow 12-18 months for implementation of these activities, ending at your staging date. This is a reasonable expectation of the effort that will be required to complete all duties, depending on the size of your workforce
What Should I Do Next?
- Early planning is the most effective way to ensure you meet compliance based on your staging date.
- Consult with a knowledgeable service provider as soon as possible to get details of your individual compliance needs and to understand your duties.
- Evaluate your needs for expert advice and assistance. Regulations can be complicated and failure to meet your duties can result in penalties.
- Draw up a detailed project plan. Specify dates for individual tasks to be accomplished based on your staging date. This will help you identify where you may need professional help to meet task deadlines.
- Invest in effective communication and engagement with employees. Make sure they understand the process and the implications to them of auto-enrolment and your pension scheme.