2nd May 2017
What is Auto Enrolment?
Saving for life after retirement is not at the forefront of many people’s minds, especially if you have just entered the world of work. The truth is we are all living longer so at retirement age we will need to fund the next stage of our life, however long that may be. This is where auto enrolment comes in – an initiative introduced by the Government to make it mandatory for companies to give their employees the option of paying into a work place pension.
How does Auto Enrolment affect you as an employer?
If you own a company that employs another individual, you have a legal right under the 2008 Pension Act to set up automatic enrolment. The Pension Regulator website has a whole host of information that will guide you through each process of auto enrolment, what you need to do by what date and how to do it.
What’s your Staging Date?
One key thing to note is your staging date. This is a date allocated to your company by which you need to have put your employee scheme in place, and can be found through your PAYE reference. You need to ensure everything is in place by this date.
When do you need to inform your employees?
Communication is key when it comes to informing your staff of automatic enrolment. Think of it as a duty of care to your employees, but ultimately retirement plans are their decision so it’s important they understand what it means to opt in or opt out. Employees need to be informed 6 weeks prior to automatic enrolment.
How does Auto Enrolment work?
As an employer you must pay at least the minimum amounts as stipulated by the Pensions Regulator. These can be found here: http://www.thepensionsregulator.gov.uk/employers/contributions-funding match the percentage your employee pays into their pension. The minimum contribution both parties can currently pay individually until April 2018 is 1% (2% in total). As of 6th April 2018, this will rise to 2% (for the employer and 3% for the employee) and 3% for the employer and as of 6th April 2019. Both you and your employees can also choose to pay a higher amount than the statutory limit.
If you now know what you need to do but just don’t know how to get started do get in touch. The best course of action is to speak to an IFA – if you need some advice we’re happy to recommend a good one!