It is a Criminal offence for an employer, not to set up a pension scheme for their employees. It is also an offence if they do not automatically enrol staff, or subsequently re-enroll them after 3 years if they originally opted out of joining a pension scheme. If you “induce” an employee to opt out this is a serious breach of legislation and can result in hefty fines!
Auto enrolment is the name of the process that The Pensions Regulator put in place, where ALL employers are legally obligated to provide a Qualifying Workplace Pension Scheme (QWPS) to their employees & contribute towards their pension.
Many employers are either leaving Auto enrolment to the last minute, or are not concerned because it is still a year or 2 away. This is a MISTAKE!!
There is a reason The Pensions Regulator is notifying smaller businesses of the date they have to have a pension scheme set up for their employees 2 years in advance:
The reason is that there are many steps an employer has to follow to get to this stage and beyond!
1. Do you know your staging date?
2. Do you know which employees need to be automatically enrolled and those that can request to be enrolled ?
3. Will you be able to research and implement a compliant pension scheme?
4. Will you be able to send all regulatory communication to your employees within the times set by The Pension Regulator ?
5. Will you be able to enrol your eligible workers by the deadline given?
6. Do you know when & how to contribute to your employees pension scheme?
7. Are you aware of your ongoing compliance responsibilities ?
8. Would you be confident in Completing your Declaration of Compliance?
If you continue to fail on compliance, you will face fines of either £50 or £500 a day ongoing, until you rectify any compliance issues!
166 Employers were fined in the last Quarter of 2014, whereas only 3 had been fined in the previous 2 years.
The figures show The Pensions Regulator is clamping down on smaller employers.
Do not be an employer that thinks that they have all the time in the world or one that leaves it too late before getting an action plan in place.
The Pensions Regulator will not take excuses!
1. Know your staging date.
2. Assess your workforce
3. Review your pension arrangements
4. Communicate the changes to “all” of your workers
5. Automatically enrol your “eligible” workers
6. Register with The Pensions Regulator & keep records (legal requirement)
7. Contribute to your workers pension
8. Ongoing payroll assessment
Your Accountant cannot “advise” you of a suitable pension scheme. They can only give you known facts. The decision is yours, but will the scheme be value for money and does it provide the ease of set up and governance you are looking for?
It is a Criminal offence for an employer, not to set up a scheme where required, not to automatically enrol staff and not re-enrolling them after 3 years! It is also the case where an employer “induces” and employee to opt out of a pension or not to join!!
Have you worked out the cost per employee for contributions? As an example, if you have an employee earning £20,000 gross per annum, by 2008 it will cost you an extra £600 per annum in contributions for that 1 employee alone!! Now multiply that by your total workforce!!
Do you know if the payroll software used to pay employees and to deduct tax contributions will be able to manage the duties of auto enrolment? This includes alerts when an employee becomes eligible for the purposes of auto enrolment, the ability to correctly send the payroll data to the pension scheme provider and many more necessary tasks.
Small Businesses are only allowing 3-4 months to prepare for their auto enrolment duties!! The Pensions Regulator (TPR) recommends 12 months if not more. There is a reason for this: You cannot make time up, but you can make it easier!
Are you aware of which pension scheme providers will accept your business? Many are shying away from smaller sized businesses, which may leave your options limited!
Do you know the different categories of employee in your business and your legal obligations? There are 3 categories of worker for the purposes of auto enrolment. You must know your responsibilities to each one. This is relevant to pension contributions all communication and ongoing administration of the workforce.
For businesses with less than 49 employees, a Pensions Regulator survey said that 30% of employers will seek the advice of an auto enrolment adviser.
They want you to be compliant. Not fined and out of pocket!
Don’t be an employer who is!
169 fines in the last quarter of 2014 alone and that figure WILL increase as smaller businesses begin their auto enrolment obligations!!
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Sesame is entered on the Financial Services Register under reference 150427. The FCA does not regulate trusts and some forms of tax planning. Astute Money Management Ltd is registered in England & Wales (registration number 04206845) at address: 12 Meyrick Park Crescent, Bournemouth, BH3 7AQ