Providing pensions to the workforce can prove to be tricky for businesses of any size company. Legally, an employer must auto-enrol eligible workers into a pension plan at their staging date, which continue to be rolled out until 2019. Businesses must remember that failure to comply with this legislation could lead to them having to face considerable fines for failing to follow the rules in a timely fashion.
It is important to know the company staging date and plan well in advance.
Auto-enrolment and staging dates
Within the UK, there are half a million employers that have fewer than 30 employees, and this means that they will be expected to enrol all staff (who are eligible) into a pension scheme that they must then pay into. Each employer will be given a specific enrolment date, and they will have to ensure that they are organised and ready to go before this time. This is known as a staging date - by this date all workers must be assessed and communicated to and those that are eligible will need to be auto- enroled into a qualifying workplace pension plan, and failure to do so could result in a fine. If businesses are not organised in time then they could find themselves, paying a fixed penalty of £400 in addition to a daily fine amounting to £50 to £500, and they could even face prosecution.
At this moment in time, all employers should have plans in place for the transition - if you do not, it is time to begin planning. There is plenty of help available to businesses to ensure they are ready in time, and there is also guidance available from Options Corporate Pensions UK.
Businesses have many different things to consider on a daily basis, and that could mean that pensions fall down the list of priorities - but this matter should not be overlooked. For those businesses that require support and assistance, approaching a trusted company with plenty of time is the best course of action. This can certainly help them to avoid paying any sort of fine that could negatively affect their bottom line.
Begin planning sooner
This has already been touched upon, yet it is such an important factor within the process that it has to be mentioned again! Preparation is key, because this will allow businesses to factor in the time it will take to get everything up and running. It will also allow you to plan for potential problems or surprises. Failure to do this will simply mean that the process can be drawn out, and this could result in your business missing deadlines. It is a simple fact that preparation is the most important part of the process. As the old saying goes, if you fail to prepare you should be prepared to fail!
Understanding the objectives
Any employer has to take a look at the task at hand and understanding the objectives - this will allow them to understand what they need to achieve within the pension planning process. It will also allow you to determine the best order in which to complete the necessary tasks, and this will make the process even smoother while also allowing you to find out potential problems that may occur. Thinking about the objectives will assist with the decision making process.
Any employer should look to engage with a trusted pensions provider. Forming a constructive relationship will help businesses tackle issues and queries easily and with great customer service. Forming a relationship in this way will help to ensure that your interests will best be served.
Prepare for assessment
Businesses will have to determine how they will carry out worker assessment and communication, will they do it manually (feasibility of this will be dependent on the size of the company) or will they outsource it to their accountant or payroll provider, do they run payroll in house and does their system have the functionality, or will they look to the pensions provider to provide them with an assessment and communications to use. This is a key phase of this process and should not be overlooked, and so you should do their best to engage fully with the process. This will ensure that any problems are understood and dealt with early on.
The cost of a scheme is determined by the government who have set a charge cap for all qualifying workplace pensions which has to provide the administration and the default investment strategy that will be used to auto-enrol all eligible workers. The Trustees of the scheme have chosen the default and will monitor them on an ongoing basis to ensure they perform as planned and they provide good value for money for the members of the scheme. Some schemes will allow members to self select, or will have a range of options that advisers can use to advise the members on something different if appropriate.
The regulators requirements
As an employer who understands the requirements of the regulator at an early point in the process, it will allow you to move to a successful conclusion as quickly as possible.
Employee Benefit changes
As a business owner, you need to consider any changes to the employee benefit structure because it can affect both you and your employees at the same time. And build a positive approach to this new and added benefit that they are providing to their workers. It may require employment contracts to be updated, this too needs to be built into the planning process.
When it comes to pensions, the law now dictates that employers have to get it right. This means that they have to follow all rules and regulations, as well as inform employees of any changes or updates regarding their pensions. Employers have more of a commitment to their employees than ever before and this makes it crucial that you understand all aspects of the scheme.
Do you have questions or concerns about your obligations as an employer? Contact us today for guidance and assistance.