Worried about auto-enrolment? Here’s a ten-point plan.

Don’t panic about your pension responsibilities, writes Jono Wilson of Barnett & Turner. Start planning ahead. If you’re running a small business, the chances are you will have heard from the Pensions Regulator by now about your staging date for auto-enrolment. Although SMEs have been given extra leeway, the time is now fast approaching when you’ll need to spring into action.

The process starts by nominating a primary point of contact (usually a partner, director or someone else in a senior position) and a secondary contact who’ll handle the day-to-day operation of the scheme.

It’s important to remember that penalties can eventually rise to as much as £50 a day or more if you’ve failed to act, so there’s a strong incentive to start making preparations.

Here’s my 10-point action plan, which should see you through the initial process and ongoing administration.

1. Define and set-up your scheme.
2. Assess your workforce for eligibility.
3. Send letters to all your workers, providing details of the scheme, the contributions that will be made and the start date.
4. Enrol all workers into scheme.
5. Manage opt-outs and timely refunds.
6. Enrol new starters as well as postponements.
7. Calculate and pay over contributions.
8. Complete an auto-enrolment declaration of compliance, within five months of the scheme starting.
9. Keep up-to-date records.
10. Auto re-enrol all eligible job holders every three years.

To be ‘eligible’ in the eyes of the Regulator, an employee must be over 22, but under the state pension age, and earning more than £10,000 per year. It is possible, however, for other people to choose to join the scheme and, as an employer, you may still have to make contributions.

If you have between 30 and 49 employees, your staging date will be between 1^st August and 1^st October 2015. If you have fewer than 30 staff, the date will depend on your PAYE reference, but can range from 1^st June 2015 to 1^st April 2017. Whatever your own situation, get the ball rolling by speaking to your accountants and find out exactly what support they’re able to give you.

If you would like to discuss anything related to this article please do not hesitate to call Barnett & Turner on 01623 659659 or email Jonathan at jwilson@barnettandturner.co.uk

Think you’ve sorted auto-enrolment? Think again...

Many businesses and their employees are aware of the legislation surrounding auto-enrolment for pensions. Indeed, the ‘staging’ dates for bigger companies have already come and gone, so quite a few lessons have been picked up along the way. Perhaps your own date still lies ahead, but you’ve talked to your IFA and identified a provider? It would be easy to think you’d done the hard work. But actually, the real issues may still lie ahead. Data compliance, processing and communication are all potential headaches for businesses. After assessing your existing pension and selecting a new scheme, you need to identify your eligible employees, conduct an impact assessment and then communicate about the staging date. And when the staging comes, you’re into the business of doing the payroll deductions, physically paying the pension provider and again communicating with your staff.

Some accountancy firms provide a ‘bureau’ solution for payroll – overseeing the process on behalf of numerous businesses. If you make use of this kind of service, it certainly reduces your stress, but you need to make sure that your professional partner is geared up to the communication aspects of the new pension regime. Telling employees they are enrolled and when the money’s being deducted for instance, or compiling a remittance file and sending it to the pension provider.

Of course, you can choose to manage the process yourself, but penalties for non-compliance can be up to £10,000 a day, so even the most professional of businesses might want to look at an outsourced option. It soon becomes obvious that the pension commitment itself is only part of the cost of the new legislation. It can potentially eat up time and internal resources. And that’s before you consider the cost of purchasing specific pieces of software or signing a formal outsourcing contract.

Some of the third-party software solutions on the market can integrate seamlessly with your payroll platform, but it’s possible to create even more technologically advanced solutions. Imagine, for instance, communicating with your employees via Android, IoS or other mobile platforms. It’s relatively easy today to send P60s, payslips and pension communications, for instance, directly to employees’ phones.

The advice from experts, as you might expect, is to think ahead. If you give yourself a year to plan before your staging date, you will not only ensure that you select the right pension provider, but you’ll also have in place everything you need for practical implementation.

If you would like to discuss anything related to this article please do not hesitate to call Barnett & Turner on 01623 659659 or email Jonathan at jwilson@barnettandturner.co.uk

The automatic solution: talking to your accountant about pensions

Back at the beginning of the 20^th century, when the first old-age pension was introduced in the UK, there were 10 people of working age for every person drawing their retirement income. Today, that ratio is 3:1 and it’s set to drop still further to 2:1 by 2050. Given that our pensions are covered by the current working population, it’s hardly surprising that government has – for many years – been worrying about the long-term sustainability of state provision and urging us all to supplement our pension with private plans.

In 2012, we moved from gentle cajoling to a more formal system, with the implementation of the terms of the Pension Act 2008. Auto-enrolment requires every organisation to set up and contribute to a pension for their employees and has been trailed heavily through TV commercials. The three millionth worker was signed up in March 2014 at West Ham United football club.

The system is being phased in up until 2018, giving smaller employers greater time to adapt. But the message from accountants is that even micro businesses now need to focus on the challenges that the legislation poses.

Owners and managers can’t afford to stick their heads in the sand and pretend that the transition to auto-enrolment will be plain sailing. It’s certainly considerably more complex than, say, HMRC’s Real Time Information scheme for reporting PAYE. The recommendation from experts is usually to allow a year of planning before your own ‘go-live’ date, known as the staging date. Registrations are expected to peak in the fourth quarter of tax year 2016/7, but you can check your own particular staging date very quickly by visiting The Pension Regulator’s website at www.thepensionsregulator.gov.uk

What are the complications for employers? Well, first of all, you’ll need to assess your employees to see who counts as an ‘eligible worker’ under the terms of the legislation. (This will probably be an ongoing process, as members of staff leave and others join.)

The next thing is to identify a qualifying pension scheme. The People’s Pension is one of the key players in the market, along with Danish firm NOW: Pensions. Some group deals might be available through other parties too. But the government – recognising that many providers may not be interested in a scheme with fixed criteria including a charge cap of 0.75% – has also created the National Employment Savings Trust (NEST) as a backstop. Even if you choose this option though, the onus is on you, as an employer, to sign up.

After that, there’s a process of communicating with your workforce, enrolling those who should be part of the scheme and registering with The Pensions Regulator. Naturally, there are records to keep as you manage auto enrolment and you’ll need to ensure that your contributions are made in a timely fashion. Penalties for non-compliance with the regulations range from £50 a day to £10,000, so there’s a strong incentive for businesses of all sizes to ensure they’re on board.

There’s a hidden twist to the new arrangements too. Some people may be eligible to be part of the new pension, but elect to opt out.

Software solutions may well play an important part in helping you to manage the auto-enrolment process, but they’re not the complete solution. It’s important you fully understand the implications, both in terms of the administration and also the employer contribution that you will be required to make. So talk to your professional accountancy advisers about exactly how the new system impacts on your business and the level of support they’re able to offer you. An early discussion may pay real dividends in the long term.

If you would like to discuss anything related to this article please do not hesitate to call Barnett & Turner on 01623 659659 or email Jonathan at jwilson@barnettandturner.co.uk