In October 2012 the Government introduced a new scheme to ensure all UK workers pay into work pension schemes, this is known as the automatic enrolment pension scheme. This system means that anyone over the age of 22, working in the UK and earning over £9,440 a year, must be automatically enrolled in this scheme by their employer. When the system is rolled out across all of the UK over the next few years, all employers will have to do this by law.
The Staging Date
Preparing your business for this change will help ensure it goes smoothly. The first thing to do is to find out when this will affect you. Find out your staging date from The Pensions Regulator, the government program that monitors and polices the scheme. It couldn’t be easier to find this date, simply enter your PAYE reference into the website, and with a click of a button you have your date. Once you have this date you can begin your plan.
Assess your workers
Your workforce will likely be made up of eligible and non-eligible workers. As stated above, an eligible worker is aged between 22 and the state pension age, is working in the UK and earning over the limit stated by the government. At the moment this figure is £9,440, however, generally each year this amount rises. All eligible workers must be enrolled into a pension scheme and all workers who are not eligible can opt in.
Review your existing pension system
You may already have a pension scheme. In this case you will need to check if this scheme qualifies for automatic enrolment. If it does you can choose to enrol all eligible staff into it. If not, you will either have to choose a different scheme, or there may be ways of changing your policy to comply with the automatic enrolment scheme.
Choose a Pension Scheme
If you do not already have a pension scheme or wish to change your existing one, you will need to choose from a number of qualifying pension providers. NEST, the National Employment Savings Trust, is a scheme established by the Government that is obliged to accept all applications of employers. RTI Made Easy offer their pension scheme through NEST and provide discounted management for your business. RTI Made Easy can simplify the process and ensure you and your employees are paying the right amount at the right time and won’t be liable to any reprimands.
Communicating all the information to your employees is very important. Employers by law must inform all employees in writing about changes to their pension. It is the employer’s duty to give employees the right information and at the right time. A template for these letters can be downloaded from The Pensions Regulator website and helps employers describe clearly how the changes will affect each member of staff individually, helping employees understand what is going to happen.
When enrolling employees into your chosen pension scheme, you will need to inform The Pension’s Regulator how you have fulfilled the requirements of the new enrolment scheme. To do this you will need to register with them and then keep a record of your worker’s earnings, what you have contributed into a scheme and any eligible employees who have opted out. You will need to continuously monitor all of your staff making sure when those employees previously not eligible are enrolled when they become eligible, whether through a rise in age or pay.
With your plan set up and the date of your staging noted, when the time comes you will be prepared. By 2018, all businesses in the UK will be complying with the automatic enrolment scheme, be an employer who is prepared and ready for the change.