Auto Enrolment – What is it?
‘What’s auto enrolment?’ I hear you cry. In the most basic terms, it’s legislation that makes it compulsory for all employers to provide a suitable pensions scheme for their employees. And it applies to every UK business, even if you only have one full-time employee – and that means it’s more than likely to apply to your business too.
With ever-increasing numbers of pensioners, and an endemic lack of proper pension provision for the growing UK workforce, the Government has brought in auto enrolment to ease the burden on the state pension coffers and to make it mandatory for businesses to supply a pension to their workers.
For the big, corporate giants, this process of setting up pensions provisions began back in 2012. But as we hit the last quarter of 2015 and head into 2016, the staging dates for small and micro businesses to meet their auto enrolment obligations are looming large.
So is your business ready to meet these requirements?
We’ve looked at what’s required of small businesses when setting up an auto enrolment scheme, and here are the big challenges we’ve highlighted – and which you’ll need to overcome.
A bewildering choice of schemes
As an employer, it’s your job to research, find and engage a pension provider. And there’s a huge range of different schemes, providers and options out there, all marketed as giving you the best scheme for your money.
Faced with this cornucopia of scheme options, it can be tricky to choose a scheme or provider that’s ideally suited to you and your employees – especially if you’re not up to speed with the latest pensions and investment guidelines.
Implementation of schemes can be complex and expensive
Cost is a big consideration when choosing a scheme, as is the complexity of the implementation.
There are a lot of different elements to take care of, including reviewing your workforce for eligible employees, updating your payroll processes and systems, writing and sending out communications to your workers, not to mention the overriding costs of signing up with a scheme provider.
Auto enrolment will take up a lot of your time, energy and money, so it’s important to factor this into your business planning.
Most businesses want the most cost-efficient route that will also benefit employees. And choosing a scheme that has the right benefits to your people, but doesn’t hit your bottom line too heavily can be a tough process.
There’s no escape; registration is compulsory
Lastly, auto enrolment is not something you can opt out of, as an employer. It’s mandatory to sign up and provide a workable scheme for your employees (and potentially the company) to pay into.
So the time to act is now, so you’re prepared, up to speed and have your scheme in place by your assigned stating date. This will fall between 2015-2018, depending on the size of your business, when the company started trading and whether you pay your staff through PAYE – you can check your company’s staging date here.
And if you don’t meet your staging date, it will cost you. There’s a fixed initial penalty of ¬£400, which could be escalated to a financial penalty of up to ¬£5,000 for individuals and up to ¬£50,000 for organisations. So meeting that date is critical.
We can shoulder your auto enrolment burden
We’ve combed the market looking at the available schemes for small businesses, with an eye on benefits, ease of implementation and overall cost. And we believe we will shortly have the most appropriate scheme for the smaller business owner.
We can help you reduce the hassle of auto enrolment by providing the best-in-class scheme provider, the payroll advice and administration and helping you meet all your auto enrolment requirements by your staging date.
If you’d like to talk to us about your auto enrolment needs, please drop us a line to arrange a meeting.