You’ve heard about Auto Enrolment, but what exactly does it mean?
Auto Enrolment has been in place for a while now but don’t ignore it, its going nowhere.
The principle is straightforward, every UK employer must put in place a “qualifying” workplace pension scheme, automatically enrol all of its eligible staff into the scheme and make pension contributions on their behalf.
The contributions will be funded partly by deduction directly at source from your employee’s salary and partly as a direct payment by you as their employer. The level of contributions are tiered increasing April 2018 to a total of 5% (2% from the employer and 3% from the employee ) up to a total of 8% of salary (3% from the employer and 5% from the employees) from 6th April 2019 onwards.
Eligible employees include those:
- aged between 22 and State Pension Age
- earning more than £10,000 per year (2015/16 limit, this amount will change)
- work in the UK
Each business has a staging date by which it must comply with the regulations or face large financial penalties. Important to note that if you have become an employer for the first time on or after 1 October 2017, you will immediately have legal duties for your new member of staff. These duties apply from the first day the first member of staff started working for your client. This is known as their duties start date.
Employees can choose to opt out of the scheme but every 3 years as an employer you must offer them the chance to enrol.
What does this mean for my business?
You will need to ensure you are ready to fully comply with the regulations by your staging date which means that you will need to have undertaken the following activities:
Set up a qualifying Workplace Pension Scheme.
Assess and categorise your workforce
Explain everything to your employees and send all required communications
Have systems & processes in place to automatically enrol them when they become eligible.
Ensure your payroll software (or outsourced provider) can manage payments and information to your pension provider.
What Happens If I Get It Wrong?
You will be ultimately responsible for ensuring that you have a compliant scheme in place and making sure the correct employee and employer contributions are made every pay period.
If you fail to meet your requirements as an employer you face the risk of daily penalties:
from £50 per day, for small employers (less than 5 employees), to
£10,000 per day for large employers (more than 500 employees)
These penalties will continue to apply until such time as you fully comply with the regulations.
Don’t take the risk of being burdened with large financial penalties – make sure you understand your obligations and start to prepare well in advance of your staging date.
Not sure where to start & think you might need help?
Our team of experienced payroll professionals have been involved with the implementation of Workplace Pensions from the start.
Recognised by the Payroll Awards for our Auto Enrolment innovation we can provide you with lots of information about the implications for your business and help you to start the process.
Auto Enrolment Solutions from Qtac Payroll
AE Supported Payroll Software
Our HMRC recognised payroll software, written by our in-house developers can help you manage the entire auto-enrolment process from start to finish and significantly reduce your administrative burden.
The extensive range of features included within the innovative AE Control Centre will help you:
- Select and set up your Pension Scheme
- Assess your workforce
- Generate Staff Communications
- Link directly to your pension scheme with information on eligibility and payments
- Manage Payroll deductions
- Monitor ongoing eligibility of employees
What’s more we offer a Free, no obligation Demo and 45 day trial of all of our software products so that you can ensure they meet your needs before you commit.
Outsourced Payroll Services
If you would prefer not to manage your payroll in house we offer a fully managed, outsourced payroll service.
Using our in house payroll software with all of its built in Auto Enrolment functionality our team can support you through the entire process and manage things on your behalf.
Outsourcing is an extremely cost effective and hassle free option for businesses not wishing to be burdened by the cost and risk of getting things wrong.
So, get in touch to see how we could benefit your business & obtain a free quote for our managed payroll service.
It could be the answer to all of your questions.
Further Help And Advice
At Qtac we are committed to ensuring that businesses understand the implications of Auto Enrolment which is why we have created a series of free resources to help.
Our Knowledge Bank provides further information and guides to help you understand the changes and what you need to do.
We also produce regular blog posts on the topic which can be located in the Qtac Blog.
Alternatively, why not join our team on a free Webinar which we run on a regular basis.