Current Issues | Tax | 22nd April 2015
Rules are being introduced which require employers to enrol eligible employees into a pension scheme and make contributions. Employers are affected in size order, with larger employers already required to have implemented their schemes. There are substantial penalties for those who fail to comply. Some employers are treating auto enrolment as an opportunity to fully review their pension arrangements whilst others simply wish to comply.
This note sets out the key stages of the implementation process for most employers. Please speak to your usual contact at Shipleys for further guidance on where to get help.
|Step||Action||When to act||Options|
|1||Know your staging date||Now||Ask your payroll provider or go to the Pensions Regulator Website.|
|2||Inform The Pensions Regulator of your business’ “point of contact” for the scheme||Six months before your staging date||You need to provide a primary contact. The point of contact is normally a senior member of the business. If Shipleys is your payroll provider we recommend adding us as a secondary contact.|
|3||Appoint a third party advisor to assist you through the process||Six months before your staging date||The business needs to speak to a financial advisor to decide the best type of scheme for the business and employees. The options range from a basic compliance scheme to a bespoke scheme to achieve specific objectives. This can be done by the business itself direct.|
|4||Collate all employee data||Three months before your staging date||This can be done by the business itself with assistance, if necessary, from your payroll provider.|
|5||Third party advisor to appraise and recommend a pension provider||Three months before your staging date||This can be done by the business itself direct. If appropriate, we have financial advisors that we recommend and have negotiated fixed pricing with for basic advice to the employer and an introduction of the appropriate scheme to the employees.|
|6||Communicate to all staff pre-staging and provide a detailed pack||a) Communicate three months before staging date; b) Send packs on staging||a) This can be done by the business itself direct or by the third party financial advisor; b) This is provided by the pensions provider.|
|7||Review payroll individuals classifying them as eligible, non-eligible & entitled workers||One month prior to staging date||This can be done by the business itself or your payroll provider.|
|8||Auto enrol your workforce||At staging date||This can be done by the business itself or your payroll provider.|
|9||Complete your declaration of compliance to The Pensions Regulator||Five months post-staging date||This can be done by the business itself direct, the payroll provider or the pension provider.|
- This is a simplified step overview for the most basic compliance.
- The responsibility for auto enrolment is the employers'. You can outsource part or all of the process but the employer will be fined if the business does not comply.
- If Shipleys is your payroll provider we will be contacting you to discuss the additional payroll cost to cover the additional work for auto enrolment. The cost will depend on who your pension provider is. If you opt for the basic solution this, on average, will increase your payroll costs by 20% on your existing costs.
- We have negotiated a rate of £750 plus VAT as a one-off cost to use the services of a financial advisor who will review the business’ pension needs. The options range from a basic compliance scheme to a bespoke scheme to achieve specific objectives.
Specific advice should be obtained before taking action, or refraining from taking action, in relation to the above.