Auto enrolment is the statutory requirement to have a pension fund for all your employees who must be enrolled automatically unless they specifically request in writing you to be excluded. There are penalties should you as an employer exerts undue influence on their decision making. The cost is extensive administratively as well as financially.
Administratively in that you have to report monthly to the Pension Administrator, manage employees leaving and joining, a payment due must be calculated each and every month and the pension fund needs its own administration.
Financially as the company must contribute 3% of the salary bill to the pension fund. The caveat being that the 3% is based on earnings that fall within the band as being due for a pension payment. Employees similarly will be forced to contribute a %.
The staging date is determined by the number of employees in your PAYE scheme on 1 April 2012 with the larger employers complying first starting last October. The last date will be 1 April 2017. The Pension Administrator will write to you 12 months before your start date and again 3 months before. You can also check your date online using your Employers PAYE reference number by going to the Pension Regulator’s website at this link staging date timeline.
You can bring your staging date forward under certain conditions. Namely;
- You must have a current staging date
- You must have an agreed pension scheme in place
- You must notify the Pension Regulator in writing at least 1 month before your staging date
- You must auto-enrol your eligible employees by your new staging date.
You can also postpone your staging date by up to 3 months. In case of a deferral you need to issue you a notice to your employees.
Auto-enrolment as stated earlier is administratively burdensome and has set deadlines on when employees must be consulted. This starts 12 months before the staging date so even if you staging date is say September 2014 you will need to start the process now.
Where employers do not wish to have their own pension fund they can use a Government pension scheme referred to as NEST.
More details can be found on the Pension Regulators website Pensions Regulator
For assistance do call Richard.email@example.com or phone 0782 729 3651