Wednesday, 24 June 2015

Pension Auto Enrolment

Our staging date for Pension auto-enrolment is fast approaching, in fact, it is April 2016. So we thought we should do something about it. When auto-enrolment was announced it was a big thing, but the staging date for smaller companies was so far off, that it has all gone a bit quiet.

Whether you agree with auto-enrolment or not doesn't matter at all really, it is happening. From the beginning of June this year the smaller companies started to have to provide the service for their employees. In fact, auto-enrolment is going to apply all the way down to single employment situations. The idea, of course, is to deal with the lack of pensions and provision for old age that a huge percentage of the population have. Around 14 000 companies will reach their staging date this month alone, followed by tens of thousands over the next 2 years.

So are you ready?

As an employer, if you don't provide a service then you will open yourself up to fines.Research by NOW: Pensions shows that some 350 000 companies are at risk of being fined.

The thing about auto-enrolment is you have to enrol all your employees onto a scheme, and only then can they opt out. So far 9 in 10 employees have chosen to stay in their pension scheme. So if you have employees over 22 years old that earn more than £10 000 per annum, you need to be looking at this. You can find your staging date using your payrol number and going to this website If you don't do anything then you will face a fixed penalty notice of £400. If you continue to ignore it, then the fines are ever increasing up to a whopping £10 000 per day!!

Morten Nilsson, from NOW: Pensions said "Auto-enrolment is fast becoming a reality for thousands of firms across the country and there really is nowhere left to hide. Although it’s tempting to put it off, auto-enrolment is complex and the longer you leave yourself to plan, the easier it will be.

'While most employers are confident that pension providers will be happy to accept their business, the reality is that not all providers will be willing to accept all employers and all employees on equal terms. If you are planning to rely on your existing provider, talk to them early to check they are willing to help."

The scheme will automatically take a percentage of the employee's pay, currently the minimum is 2%. The employer will also make a contribution, and then the Government will also pitch in using tax relief.

Under auto-enrolment, a percentage of the employee's pay is automatically put into a pension. The employer also contributes, with government contributions also being made through tax relief.

The levels are due to change though. In 2018, the minimum employee contribution will be going up to 8%. The employer currently must contribute 1% of qualifying earnings, but it is doubling in October 2017 and then up to 3% in October 2018.

So, after you have read all that, the best bet is to check your staging date, again it's, and make some plans with a pension provider. We have heard of quite a few smaller companies having issues, so please plan ahead...

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