Autoenrolment, the word that strikes fear into small business owners across the land. And 2016 is the year that it is going to happen for a huge amount of small businesses in the UK. According to this document http://www.thepensionsregulator.gov.uk/docs/automatic-enrolment-employer-staging-forecast.pdf from a base level of a few thousand businesses staging a quarter last year there are over 100,000 businesses staging each quarter this year peaking at over 200,000 in January-March 2017.
This means one thing. That it is not going to go smoothly! (In fact as I write this I can not access the pension regulator’s website which appears to have crashed!).
For those who don’t already know about autoenrolment (AE) the Pensions Act of 2008 brought in the obligation that all workers will have to opt out of an occupational pension plan of their employer, rather than opt in. This is referred to as automatic enrolment, and moves a significant amount of responsibility onto the employer to ensure that their employees are enrolled in a workplace pension scheme.
Employers are required to initiate automatic enrolment into their workplace according to a date referred to as a staging dates based on the number of employees in the company. The Pension Regulator will be writing to all businesses with a PAYE scheme giving them this date. There are penalties for companies who are not compliant by their staging date.
The only exception to Companies having to comply with the Autoenrolment rules is that Companies with only one Director and no staff, or multiple Directors none of whom have employment contracts. These companies can notify the Pension Regulator that they are not an Employer as far as Autoenrolment is concerned by completing an online form. Details are here: http://www.thepensionsregulator.gov.uk/en/employers/what-if-i-dont-have-any-staff.aspx
The minimum contribution up to April 2018 is 1% from the Employee and 1% from the Employer. The Employer can cover the Employee’s contribution but not the other way round. Details of the minimum contributions are here: http://www.thepensionsregulator.gov.uk/employers/contributions-funding-tax.aspx
We at Sutherland Black sent a considerable amount of time assessing the best way forward for our clients and already have helped a number of clients get to compliance. Firstly a suitable pension scheme needs to be set up if there is not already one in place. Then the next administrative hurdle is that all employees need to be assessed every month to check their eligibility and a complex set of rules applied. Letters to employees need to be generated and an upload of data is needed to the pension provider to inform them of the correct contributions for each employee. For clients where we carry out the payroll for an additional fee we can provide all the necessary admin. We will be recommending that clients who do their own payroll check that the software they use will carry out the AE functions and do the requisite upload to their pension provider.
We will be contacting all of our clients to check that they are compliant, but if you have any questions please give us a call.