"I'm sorry? You haven't heard about Automatic Enrolment?
Ah, there it is – the "sorry" word. It's used or implied quite a bit when the Government seeks to remind small businesses of their responsibilities, isn't it? The gist from the Pensions Regulator invariably being: "Comply with the legislation, or we'll find you, and then you'll be sorry". This usually means there'll be a hefty penalty to pay. Yikes! But it doesn't have to be like that. Not at all. Especially when it comes to workplace pension auto enrolment and re-enrolment.
Reasons to be positive
Why? Because, for a myriad of small businesses across the UK, having a quality pension solution in place is a positive thing, for all parties involved. Here's why:
- Employers only have to pay minimum contributions (not the substantial sums that some scaremongers are claiming)
- When making contributions, calculations can be based on employees' earnings over a certain amount, not their entire salary
- You won't have to pay contributions at all for Entitled workers (workers aged at least 16 but under 75 who earn less than £5,824)
- You may not have to pay contributions for your entire staff, as workers have the right to opt out
- It's a flexible system. As a small business owner, if you want to contribute more than the Statutory minimum to workers' pensions, you can
- Employees can draw comfort from the fact that their long-term financial security is being taken care of, with each week that they go to work. They get tax relief from the Government on their pension contributions, too.
- The workplace pensions are transferrable. So, if someone changes jobs, they simply take their pension with them
- There are auto enrolment payment providers out there who know exactly what to do, and can take on the lion's share of the work involved, leaving employers to basically get on with business!
Help really is at hand
With all those positives, it's easy to see why thousands of businesses are already happily complying with pension auto enrolment legislation (without needing to be reminded of the "hefty penalty" bit). Employers everywhere think it's a fine idea in fact; as do employees.
Now, auto enrolment is on the horizon for many small businesses (it began in 2012). If you're a little confused about what's involved, don't worry. You're not alone. And it's really not all that hard to get to grips with or manage.
Your key responsibilities are to:
- Provide a suitable pension scheme for auto enrolment
- Keep all employees informed, including non-eligible employees
- Ensure your employees receive information from your pension provider
- Handle any employees wishing to opt-out of the scheme
- Make the necessary changes to your payroll, allowing you to pay the pension contributions
And then to:
- Re-check the status of all employees at every pay-run
A painless process
As an employer, do keep records of what you've done to comply with your duties, this includes relevant files regarding the payment of workplace pension contributions (a key element of your auto enrolment regime). Oh, and you and your pension provider need to maintain specified records about members and their status in the scheme. But that's not the headache unwise and short-term thinking legislation dodgers think it is. Au contraire.
Seeing all this as an opportunity (rather than a hassle) is the best mindset to adopt. Really. Think about it. Auto enrolment provides a chance to deliver strong positive employee engagement. How? Well, by employers making contributions, for one! It will also bring you up to speed with other businesses doing the same. And when seeking new staff, you can offer workplace pension auto enrolment as part of their corporate benefits package.
Enjoy peace of mind
Of course, with the changes to auto enrolment that lie ahead, there’s bound to be some confusion and lack of understanding amongst businesses about their obligations as employers, and the real day-to-day work that auto enrolment calls for. But, fret not. An experienced payroll provider will help you manage your pension scheme, meaning that you can rest easy knowing that the data will flow seamlessly. They will ensure pension payments are accurate and processed in a timely manner. An advantage of this integrated approach is that your data is secure at all times, and not being sent through a third party.
So, there's very little to worry over, and much to be excited about. But don't delay...
ACT FAST, to grab the best solutions
With over 500,000 employers set to stage auto enrolment in 2016, payroll providers offering quality pension solutions (with online capability and increased flexibility 'built-in') are already becoming inundated with enquiries from small business owners everywhere. And one of the largest UK pension providers will implement no more than 10,000 new pension schemes in 2016. This gives an indication of the reduced choice smaller employers will have when it comes to selecting a quality pension scheme for their employees.
The bottom line is, when it comes to securing a quality pension solution, or to comply with re-enrolment this year, you need to act sooner rather than later. You'll feel good about doing it, and your staff will LOVE you for it. Promise.