Auto Enrolment – How does it affect you?

BOLTON, U.K. - May 23, 2014 - PRLog -- The Government’s strategy to tackle the much-publicised "hole" in the UK pension bucket may be a classic case of shutting the stable door after the horse has bolted, nevertheless, it’s here and it will affect every business that employs any staff in the UK.

The Pensions Regulator, you’ll be no-doubt pleased to hear, is "Committed to increasing confidence and participation in work-based pensions" and wants to ensure that when we reach pensionable age we have a pension fund in place to let us see out our days without becoming a drain on the Government’s stretched purse strings.

To this end every UK employer must comply with the law on workplace pensions and automatically enrol their staff into a suitable scheme. Rather than trying to stipulate a single date for all businesses to start "auto-enrolment" a range of dates, called staging dates, determine when each employer must have a scheme in place. The first staging dates for larger businesses were in 2012 and by 2018 all business will have to comply. Most SME’s are likely to reach their staging date by the end of 2015 and you can find out your own staging date by entering your PAYE reference number at http://www.thepensionsregulator.gov.uk/employers/tools/staging-date.aspx

The cost of non-compliance is frightening. Where an employer has failed to comply with an original compliance notice and subsequent fixed-penalty notice there will be daily escalating penalties as seen in the table here. Where would your company sit?

Employees in PAYE scheme          Daily Rate

         1 – 4          £50

         5 - 49          £500

         50 - 249          £2,500

         250 – 499          £5,000

         500+          £10,000

And the cost of the scheme itself? You must automatically enrol all staff who are aged 22 to state pension age who are working in the UK and earning over £10,000 per year.

Staging Date          Minimum Employer Contributions         Total Minimum Contributions

To September 2017          1%          2%

October 2017 to September 2018          2%          5%

October 2018 onwards          3%          8%

How much will you have to contribute depends on your staging date. Ask yourself how many people have 8% being paid into their pensions.

As well as making these contributions and setting up the scheme employers will have a vast amount of administration in managing the auto-enrolment pension scheme so my advice would be to outsource the whole process to a specialist provider so you can get on with running your business.

Download our guide today. (http://www.payepeople.co.uk/wp-content/uploads/2014/05/Au...)