Welcome to the first instalment of our advice perspective blog for Qtac, with whom we have been working on the subject of auto enrolment for some time. We are excited to bring you a monthly update regarding our joint plans moving forward and have included a brief introduction to the subject for those who have yet to get involved.
Understanding Auto Enrolment
At a basic level, auto enrolment legislation touches any organisation that employs more than one ‘worker’, which is a definition that should be considered carefully, as it can include individuals who might otherwise consider themselves to be self employed. The worker category is broken down into three sub groups called eligible jobholders, non eligible jobholders and entitled workers.
An employer will be required to set up a qualifying workplace pension scheme, automatically enrol any eligible jobholders who meet the qualifying criteria, and make pension contributions on behalf of those eligible jobholders. A broad definition of an eligible jobholder would be an individual that is aged between 22 and state pension age, earning more than £10,000 per annum and who works in the UK.
Employers must also ensure that they provide access to a pension scheme for those non eligible jobholders and entitled workers who do not meet the qualifying criteria, should they wish to ‘opt in’. This means that some employers will have a responsibility to provide access to a registered occupational pension scheme even where there are no members making active contributions.
All employers will by now have been allocated a ‘staging date’, by which time they should have set up an AE scheme and be ready to start making contributions. Staging dates can be found by inputting a PAYE reference at the pensions regulator website.
Chase de Vere will also be happy to provide a free bespoke ‘Initial Impact Assessment’ report, including employer responsibilities, staging date and implementation timeline upon request.
Very large volumes of employers will begin staging from late 2015. With only a little over 12 months to go, and with a recommended 12 month lead in time for the start to finish implementation of a qualifying scheme, we would suggest that now is a good time for any employer that has not engaged in the auto enrolment process to begin considering their responsibilities.
More information regarding workplace pensions and auto enrolment responsibilities can be found here
What are the Considerations?
Many employers have indicated that they feel uncomfortable implementing a pension scheme that must meet specific regulatory requirements, particularly where there has been little previous involvement in operating workplace pensions. We would urge employers to ensure that they understand their requirements in plenty of time, in order that they don’t rush the implementation of their pension scheme, particularly if they are looking to handle it themselves.
One of the first factors that any company should consider when looking into their auto enrolment responsibilities will be how much it will cost. For many, this will mean balancing the time cost involved in understanding the legislation and taking action, with the financial cost involved in outsourcing the task to a professional adviser.
Ironically, the task at hand may prove to be more onerous for those employers with existing workplace pension schemes, who will need to establish whether their scheme will meet the AE qualifying criteria. Employers may also wish to consider whether or not to provide an advice service for those workers who have existing pension benefits, whether accumulated privately or through a previous workplace scheme.
We have been interested to see many employers choosing to pay more than the minimum level of contributions for their workers, or choosing to include additional ancillary benefits such as group life insurance, in order to stand out as an employer of choice. We will be happy to assist in the investigation of these options, and will automatically look at the cost savings that can be made by any employer whom we engage with under arrangements such as salary sacrifice.
Chase de Vere and Qtac
We are pleased to be working closely with Qtac, whose AE payroll software will handle much of the heavy lifting when it comes to employers AE responsibilities, including a calculation of the costs of making pension contributions and the communication of auto enrolment scheme info to respective workers. The payroll operation sits at the centre of the auto enrolment process and we are therefore pleased to announce that we will be imminently launching a new AE solution, enabling the payroll bureau to deliver a compliant pension scheme centrally, and at low cost. We look forward to bringing you some further detail on this scheme, named AE Professional, in next month’s blog.
At Chase de Vere we are pleased to provide a range of auto enrolment solutions ranging from the recommendation, implementation and ongoing maintenance of a bespoke pension scheme, through to a low cost fully compliant solution driven by the payroll bureau, briefly detailed above.
We are looking forward to running further seminars in the coming weeks and months and look forward to meeting you all at these events.
Please keep an eye on Qtac’s communications for the details of these events.
Should you like to discuss our services in any further detail, please don’t hesitate to get in touch using the contact details below.
If you are a payroll bureau or accountant with a number of clients staging in 2015, who you feel may be interested in opting into a compliant auto enrolment scheme at low cost, we would be particularly interested in talking to you.
|Guy Harper APFS||Mark Tarbard Dip FA|
|Independent Financial Adviser||Independent Financial Adviser|
|01225 368 325 / 07739 312 446||012258 368 362 / 07730 211 619|