Auto enrolment is here
Auto-enrolment for pensions is coming and all employers who are not already signed up need to be ready for all the obligations that it will impose on employers.
Let us start by saying that we can help you through every stage of the process, and make it all simple for you, and that there are benefits in taking action early.
What is auto-enrolment?
In a nutshell, auto-enrolment means that all employers will have to provide a pension shame for their employees and that they will have to make payments into that pension scheme on a minimum fixed scale.
Employers have to pay a minimum of 1% of the salary into the pension scheme rising to 3%, whilst the employee must contribute 1% rising to 5% by October 2018. This may affect plans for pay reviews and the structure of your business, about which you may need to start making plans now.
When does it start?
You can find your start date here (it’s called your staging date in the inevitable jargon) using your PAYE reference.
Who is eligible to join the pension scheme?
You must enrol every employee who earns enough to pay National Insurance and is over 21 into the scheme. That is the essence of auto-enrolment. These employees are then given the chance to opt-out should they wish. You can extend the scheme to other employees if you wish, but this is at your option.
Small companies must be exempt….
Absolutely not. There are no exemptions for small companies.
What about single director companies?
There are no exemptions for single-director companies. As the director, you are obligated to create a scheme, or face prosecution for not meeting a legal requirement to look after yourself!
Isn’t this another pension mis-selling scandal in the making?
Possibly; but the Government have a low-cost scheme called NEST which will provide a basic level of cover for small employers and which will allow full compliance with the requirements.
What can Nicolson Accountancy do for you?
Our conversation with pension providers indicates that smaller schemes are going to have difficulty in finding a provider, and that costs are going to be large – we’ve been quoted £3,000 minimum to set-up costs.
For smaller companies we can help by helping you through the process at a small, fixed, cost to sign your company up for NEST and to ensure that you comply with all the rules.
For single-director companies we can help you meet your requirements to opt-in and optionally opt-out of NEST, and there can be good reason for starting this now rather than at the last possible minute.
Contact us as soon as possible to discuss this.