Auto-enrolment has been a hot topic in the world of business for the past five years. Introduced by law in 2012, auto-enrolment is a requirement for employers to automatically enrol eligible workers into a workplace pension scheme, and to contribute to this scheme.
In the last four years, the auto-enrolment strategy has seen immense success, with millions of employees now enrolled into the scheme. With the plan now firmly set in motion, 2017 is an important year as over 554,000 employers are due to stage and establish a workplace pension and make contributions on behalf of their employees.
Here are four key reasons why 2017 is an important year for auto-enrolment and workplace pensions in general.
1. Only one year left for 554,000 employers
Since 2012, companies have been rolling out auto-enrolment schemes across their workforce. By 2019, all employers must have enrolled their eligible workforce into a workplace pension, and so this means 2017 is a critical year for remaining companies to get their pension plan in place and begin communicating to their workforce.
Employers will need to deploy a communication strategy to explain the changes to their staff, and this strategy should have already been rolled out (or in the late planning stages now). As well as briefing employees, companies also need to set up the payroll process to ensure all employees are accounted for and that new starters are enrolled into the scheme as soon as they join the business.
2. No PAYE scheme? Your staging date is in 2017
If you are an employer but do not yet have a PAYE scheme, then the staging date (the date you must have auto-enrolment in place) is 01 April 2017. This date is key for employees who may be employed on personal service contracts, and where an employer does not need to deduct tax.
It is important that you check carefully whether you need to proceed with auto-enrolment, and The Pension Regulator are very thorough with their advice and communication regarding auto-enrolment. If you are unsure as to whether it applies to you, it is best to check as soon as you can. The team at Options Corporate Pensions UK Ltd. is always happy to help out and answer your questions. Call or email them today and they will assist in any way that they can.
It is important that you adhere to your staging date of 01 April 2017 or you may face hefty fines for not conforming to the requirements of The Pensions Regulator. Don't let this date creep up on you! April 1 is less than 3.5 months away – this task is urgent.
3. Time to act for small businesses
Around six million people are already enrolled in a workplace pension, and the government are expecting nine million to be involved by 2019. Most of the country’s big companies that employ large workforces have already had their staging dates, but 2017 is the year for most small businesses. 2017 is expected to be a busy year for pension companies, with many small businesses seeking a pension company for their workplacepension. Options Corporate Pensions UK is here to support you..
In some ways, auto-enrolment may be easy for large companies, as they have teams of people to manage the HR, finance and pension functions of auto-enrolment, but small businesses may not have the skills, time and workforce to be able to dedicate to the work. It is important for your small business to not to put the task off, but ask for help in order the get the scheme up and running. This is a seriously important issue, and so it should be dealt with as soon as possible.
4. 2017 review of auto-enrolment
In 2017, The Department for Work and Pensions plans to start conducting a review on auto-enrolment. There is a statutory requirement for the government to conduct the review before the scheme is fully implemented, in order to evaluate how the scheme has progressed thus far and what needs to be done in order to improve the scheme.
The review plans have been put in place to continue the success of auto-enrolment and safeguard the scheme for the long-term future. However, there are sure to be some criticisms that the review will need to address.
While there the enrolment of six million employees has been an undeniable success, it should also be noted that approximately five million people have been assessed for auto-enrolment and then excluded. Low earners have been excluded from auto-enrolment; however, many fear that this could unfairly penalise people, particularly those who hold multiple part-time jobs. The 2017 review of auto-enrolment may look at people with multiple part-time jobs that meet the earning threshold, but as their work is not conducted solely with one employer, they are not currently eligible to auto-enrol in a pensions scheme.
The minimum contribution for auto-enrolment is currently 2%; however, this percentage is set to rise in the coming years. It is expected that with the increase required in contribution there will be a great number of people who choose to opt out of the scheme. The review will need to look at how this will be handled to help to convince savers to stay in the scheme and plan for their retirement.
All in all, 2017 is going to be a very busy year in the world of auto-enrolment, for small businesses and pension advisers. We will look forward to the review findings that will help to drive the scheme forward and make it a long-term success.
Do you have questions about your workplace pensions scheme? Are you worried about getting your auto-enrolment sorted in time? No problem at all – our friendly team of experts is here to answer your questions and get you on the right track to meet your staging date on time and in a well-organised way.