Auto-Enrolment

Now Tax Returns are done and dusted, you can focus on auto-enrolment. Whether you’re a small local café with a team of five, or a family run business with a team of 45, you will be legally obliged to offer your employees a workplace pension.

Auto-enrolment was introduced to encourage employees to save more for their retirement as retirement savings have been declining and life expectancy has been increasing. By obliging employers to contribute the hope is that there will be a significant increase in overall retirement savings. So far this has proved the case, as there are now millions more employees saving for retirement than before auto enrolment began.

If you’ve not yet started the staging process to auto-enrol your staff, and you don’t even know where to begin, don’t worry Parsonage has you covered! Here is everything you need to know about auto-enrolment:

What is it? 

In 2008 the government introduced changes to the pensions act, and now all employers are required to contribute towards their staff’s retirement savings. The scheme has been in place since October 2012, when larger companies had their staging date. Now the focus is on small businesses with fewer than 50 employees.

Once a pension scheme is set-up in the workplace, all eligible employees are automatically put in. Any personal pension contributions, from your workers, are deducted from their salary, and it is your job to top this up with the employer contribution and pay it in to the pension.

What do you need to do to comply? 

No matter how many members of staff you have working for you, if they are paid by you; you have duties you must undertake. You need to set-up a pension scheme for your employees who meet the thresholds.

The best option is to choose a pension scheme at least 6 months prior to your staging date. It is important to write a list of your employer duties, and tick them off as you go along. This will also help you establish your declaration deadline, the date by which you have fulfilled your employer responsibilities. You usually have five months to do this.

To ensure you remain compliant, once you have set up your pension scheme, you need to monitor your employees in case their entitlements change due to age or salary. If any of your employees are initially out of threshold but ask you to join the pension scheme you can add them immediately. It is important to remember you don’t need to pay into it until they are earning more than £5,824.

Here at Parsonage, we understand auto-enrolment is complex. So if you need expert advice and you want to find out more information, explore the website and call us on 0161 928 2706.