Anyone who runs a small business will have to deal with auto enrolment at some point. So it is important to understand what it is and how it affects you.
Auto Enrolment is an initiative set up by the UK government to encourage people to save for their retirement. Due to an aging population in the UK, the state pension is being put under pressure. By encouraging more people to save for their own pension, the pressure on the state pension will be eased.
Auto enrolment is becoming a key topic for employees
Eligible employees will need to be auto enrolled into a pension scheme. When the employee contributes to the pension scheme, the employer will also contribute to the pension scheme. The amounts that need to be contributed (https://www.autoenrolment.co.uk/knowledge-bank/in-depth-articles/contributions) are regulated by the government. The government will also contribute to the pension of the employee through tax relief.
What Do Employers Have To Do
Employers need to become compliant with auto enrolment legislation, or they could face hefty penalties from The Pensions Regulator. These penalties range from escalating fines, to prison sentences for company directors. So it is important to get auto enrolment right. If any of your employees quality to auto enrolment, you must enrol them into a pension scheme and contribute accordingly. Employers also face other on-going responsibilities, such as completing the Declaration of Compliance for The Pensions Regulator and communicating auto enrolment to your employees.
When Do Employers Have To Act
Employers need to have implemented their auto enrolment duties by their staging date. Your staging date depends on the number of people that you employ. You can find your staging date on The Pensions Regulator website.
Ongoing Things To Think About Once You Have Implemented Auto Enrolment
Once you complete your auto enrolment duties at your staging date, you will still have on going duties to keep on top of. Your employees have the right to opt out of the pension scheme, and so you will need to process opt out requests as and when they occur. You will also need to assess any new employees to see if they should be auto enrolled. If new employees should be auto enrolled (and do not opt out) you must then contribute to their pension at every payroll period.
Who Can Help?
Smart Pension is an auto enrolment provider for UK businesses which is free for employers. The Smart Pension account area makes implementing your auto enrolment duties quick and easy. Smart Pension will also generate the necessary employee communications required by The Pensions Regulator, for free.