Sound familiar? Hopefully not, but with the workplace pension legislation rolling out to smaller businesses over the next 2 years this could arguably be a common scenario.
Whilst at Qtac we have been raising awareness of the Auto Enrolment changes since the start and encouraging our clients and businesses in general to plan ahead, reports suggest that many companies haven’t yet started to think about the implications.
It isn’t actually as difficult as you might think as long as you know what you are required to do as an employer and most importantly where to go for help.
Follow these 5 steps and even with only 2 months to go you should meet your obligations.
Step 1: Understand your role as an Employer
There is a huge amount of information available explaining the changes and how it will impact your business. The issue isn’t the lack of information more one of knowing which piece to read.
As a starting point we would recommend the Pension Regulator Website which will explain everything and provide lots of useful information and tools to help you get things started.
Step 2: Assess the impact on your business
The first stage in this process is to assess your workforce to see who qualifies as an “eligible jobholder” and therefore must be automatically enrolled into a workplace pension on your staging date.
Eligible job holders are those that
- Aged between 22 and state retirement age
- Working in UK
- Earning above threshold which is currently £10,000
Be aware that even those employees that are not eligible to be automatically enrolled into the scheme will have the right to opt into the scheme.
When you know the potential employees you will have to include you can then calculate the financial cost in terms of the contributions you will need to make on their behalf. For the current year this will be 1% of their salary increasing to 5% in 2019.
Including your accountant within this process can certainly help to ensure that your business will be prepared for the financial obligations over the next few years.
Step 3: Arrange a Qualifying Workplace Pension Scheme
If you already have a company pension scheme in place then you will need to speak to your financial advisor or pension provider to see whether this qualifies as a suitable workplace pension.
If not or you don’t currently have a scheme in place then you will need to set one up.
NEST is the Government scheme which enables businesses to set up a qualifying scheme. The benefit of which is that it is obliged to accept all employers that apply to join it, so no matter how small your company or the make-up of eligible employees you are assured of being able to meet your obligations.
Alternatively, you can choose from the wide range of pension providers offering qualifying schemes.
At Qtac we are pleased to partner up with and recommend Pension Playpen, an online system that enables you to select and sign up for the most suitable qualifying pension scheme based on your actual employee data.
Step 4: Explain the changes to your staff
Once you have reached this stage you will need to explain the changes to your staff and the implications to each of them. They will have the right to opt out of the scheme but you must not influence their decision. As a minimum this communication must be in writing but our experience suggests they will have a wide range of questions so time will need to be set aside for answering these and providing further information.
There are helpful templates on the Pension Regulator website or you may find that your accountant or other financial advisor will have resources you could use.
Step 5: Ensure your payroll arrangements are up to speed
One of the biggest impacts of the changes will be on your employee payroll processes and so you will need to ensure that they are suitable for the additional administration involved every pay period.
If you manage your payroll in house using payroll software check what support they are providing for Auto Enrolment and how your payroll management processes will change.
Do they include employee communications within the system, can they automatically link to your selected pension provider to make monthly information sharing seamless and how do they help you monitor eligible employees and those that are opting in or out of the scheme at various times.
You may feel that these changes are one step to far in which case outsourcing your payroll management could be a cost effective and hassle free solution.
If you already outsource your payroll to a bookkeeper, accountant or payroll bureaux then a quick check to ensure they are fully prepared and understand what specific changes will take place with your existing process should hopefully be enough.
So, hopefully this quick 5 step plan will enable you to ensure that no matter when your staging date is you can meet the deadline.
Why not call in professional help?
Alternatively, bypass the entire process by giving the team at Qtac a call. We are already supporting a wide range of businesses, accountants and payroll bureaux with Auto Enrolment and can do the same for your business.
Get in touch to find out more.
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