HR 24 August 2015
Auto-enrolment: The need-to-know for small businesses
Shaz Nawaz, director of AA Accountants outlines what you should know about the scheme being rolled out as it reaches small and micro businesses to make sure you’re not vulnerable to large fines resulting from failure to comply. The new auto-enrolmentpension scheme may sound like a daunting prospect for a small business, especially if you have had limited experience with such issues, but it is vital that you educate yourself quickly to fulfil the requirements that will be bestowed upon you. By 2018, the number of workers that will be opted into the scheme will be around 11m, although the figure of those that will actually remain in the scheme has been estimated at 50 per cent, as employees are able to opt out within a month of joining. Please note that it is imperative that employers make this decision individually and any attempts to influence their decision is illegal, and a whistle blowing initiative is in place, along with penalties. As an employer, it is business critical that you enrol your staff onto the scheme, and failing to comply will result in your business being liable for large fines issued by The Pensions Regulator. So, get to know the facts if you employ anyone between the age of 22 and state pension age and pay them an annual salary of more than 9, 440 they must be automatically enrolled. There are a further two categories to take into consideration. (1) Those who have a right to join the pension scheme. You must enrol them into the scheme, but you are not required to contribute to their fund. (2) Those who have the right to opt in. Upon the basis that they ask to join the scheme, you must enrol them andmake monthly contributions. The term that you should be making yourself aware of is “staging date”, this is when your enrolment duties come into play. To find details of the staging date that applies to your business, you will need details of your PAYE size as well as your PAYE reference, but small and micro employers have been thelast to put auto-enrolment into action. Ideally, you’ll have begun to act at least 12 months before your staging date to make sure the transition onto the scheme goes as smoothly as possible. This will be started off by providing a primary and secondary contact to The Pensions Regulator, so that the important guidance and information packs can be sent through. How much you are required to contribute to the each fund relies on when your staging date is; before October 2017, employers are required to make a minimum contribution of one per cent, this then increases to two per cent until October 2018, when it will increase once more to three per cent.