Time to get ready for automatic enrolment

andy-campbellAndy Campbell is employee benefits manager at independent financial services and insurance group, Lucas Fettes & Partners (an NCVO trusted supplier). Andy has been advising employers on workplace pensions for over fifteen years and is a certified financial planner. An automatic enrolment specialist, he helps organisations meet their automatic enrolment responsibilities.

If you work in HR or finance then you have probably been hearing a lot about automatic enrolment. Charities with 50 staff or more will already have enrolled their employees into a workplace pension, but if you are a smaller organisation then automatic enrolment needs to move to the top of your ‘to do’ list.

New laws mean every employer must automatically enrol certain workers* into a suitable pension scheme and contribute towards it. If you already operate a pension scheme, you need to ensure it meets the qualifying criteria.

Organisations face fines of up to £500 per day if they are not fully compliant, so make sure you are on track and on time for automatic enrolment.

What do we need to do?

28% of senior decision makers† working in smaller organisations say that their knowledge of automatic enrolment requirements is poor. In order to meet the new regulations and avoid fines or court action, it is essential to understand your obligations.

The legal obligation to enrol certain workers into a qualifying pension scheme and pay contributions applies even if you only employ one person. Basically, if a member of staff is over 21 and earning £10,000 a year or more they will need to be enrolled. There are a number of complexities. Some employees need to be invited to join for example, so every member of staff needs to be assessed every time you run your payroll.

There are other duties you need to fulfil, such as sending communications to your workers and keeping records. You need to understand what these responsibilities are, and have the right systems and processes in place.

When do we need to be ready?

Organisations with 30 employees or fewer should be getting ready now. Automatic enrolment can be complex and time-consuming, and the Pensions Regulator advises it can take up to a year to prepare.

Every organisation has been given a ‘staging date’– you must have your pension scheme in place by this date.

By your staging date you will need to:

  • decide what contributions rates you will use and whether these will be the same for all workers
  • review any existing workplace pension arrangements you have
  • establish a workplace pension scheme that meets the automatic enrolment requirements
  • decide what, if any, postponement rules you will apply
  • ensure you have processes in place to deal with both your initial and ongoing employer duties.

The first thing to do is establish your staging date.

How much will it cost?

The amount an employer has to contribute every month will vary. You need to decide what contribution rates to use and whether these will be the same for all workers.

Minimum payments currently stand at 1% for both employees and employers, but by October 2018 contributions for eligible employees must total 8%, with the employer paying at least 3%.

You also need to factor in the costs of assessingsetting up a suitable pension scheme, changing payroll arrangements, admin and more. If you choose to manage the process yourself (without any external support) it can cost upwards of £750 to set up a workplace pension scheme via an online service, or if you elect to receive face-to-face advice it can cost from £1,500.

Where can we find out more?

Lucas Fettes & Partners has produced a guide to meeting your automatic enrolment responsibilities.

What if we need help?

You may want to consider professional support. If you already have a relationship with a financial adviser, you could start there.

Lucas Fettes & Partners, an NCVO trusted supplier, has an automatic solution Easy as AE, specifically designed for smaller organisations. They are offering a 10% discount for all NCVO members, with prices starting at £899 plus VAT.

*The term “worker” is used by The Pensions Regulator. The Pensions Regulator defines a worker as any individual who: works under a contract of employment (an employee), or has a contract to perform work or services personally and is not undertaking the work as part of their own business.

†Source: bdaily

 

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2 Responses to Time to get ready for automatic enrolment

  1. Naomi Goldberg says:

    This is fine but the one thing I cannot from anyone find the answer to is:-

    What happens if you are already paying in 3% to private pensions set up by members of staff?