office-594132_640“We’re all in” and if we’re not we soon will be. If the auto-enrolment scheme (which has cross-party support) succeeds in its aims, this statement will only be a slight exaggeration. Saving for retirement has become a huge issue and a combination of measures, of which auto-enrolment is one, aims to encourage people to make saving for their later years a key part of their financial planning.
Starting in October 2012, larger companies have been obligated to enrol eligible employees into workplace pension schemes between then and now the auto-enrolment scheme has been extended to companies with fewer and fewer employees to the point where employers with fewer than 30 employees are now obligated to have auto-enrolment in place by April 2017. After this date there will essential be a mopping up exercise for special cases such as employers without PAYE schemes or employers who started in business on or after April 2012 Read more here. Ultimately, the aim will be to have all employers of any size participating in the scheme by 1st February 2018. Of any size means exactly that, even if you are a private individual just employing a nanny or carer, if the employee is eligible for auto-enrolment then you have a legal duty to enrol them unless they actively opt out.
If you are registered as an employer than you will have received (or will soon receive) a letter from the pensions regulator advising you of your obligations and the relevant compliance dates. If you have not done so already, then it would be very advisable to check whether or not you fall under the aegis of the scheme and if so who needs to be enrolled. Ideally this should be done at least a year before your probable staging date, which at this point means as soon as possible.
Around six months before your staging date, you will need to get to grips with the actual practicalities of auto-enrolment, in particular you will need to choose a scheme and look at how your processes will integrate with it. You may find that you need to update existing processes and/or software to ensure compliance with the scheme. Undertaking this exercise should also provide a clearer idea of what costs will be involved in the implementation.
On the staging date itself, you will need to assess and enrol eligible employees according to their status at that time. To begin with, you will need to ensure that anyone who should legally be classed as an employee is actually recognised as having this status. Employers may wish to note that the government has previously expressed concern about people being treated as self-employed when they are essentially acting as employees. After this, you will need to check each and every member of staff against the eligibility criteria, bearing in mind that some staff will need to be put into the auto-enrolment scheme unless they specifically choose to be excluded whereas others will only need to be put into the auto-enrolment scheme if they specifically ask to be included. The relevant staff will need to be informed, in writing, of the auto-enrolment scheme and their rights and responsibilities in relation to it. Once all this is complete, employers will need to complete the declaration of compliance.
After the initial round of enrolments, employers will need to ensure that changes such as new hires, promotions and significant changes to employment (e.g. part-time workers going full time and vice versa) are incorporated into the auto-enrolment scheme. In addition to this, every three years, employers will need to contact any members of staff who have opted out of auto-enrolment and either enrol them into the workplace pension scheme or (re)confirm their opt out.