As we head into the age of mandatory workplace pensions, it is imperative that you as an employer are on top of this important task. If you neglect to implement a workplace pension scheme before your set deadline, you can face harsh financial penalties that could spell the end of your business.
Below we have compiled some of the most useful tips that you can use to ensure that your workplace pension scheme is implemented smoothly and on time.
- Be clear on your staging date
Before you can actually begin to enrol your staff in your new pension scheme, you must be clear on your specific staging date. This date will be dependent on how many staff you employed as at April 2012. You will have received a letter informing you about what and when your staging date will be, but you can find a variety of free planning tools online at the pensions regulator website that can help you to determine yours quickly and easily.
- Assess and Communicate
Prior and on your staging date you must assess and communicate with all employees to categorise them as either eligible, non-eligible or entitled. Those that are eligible MUST be auto-enrolled into a qualifying workplace pension scheme that you have chosen and you MUST pay the minimum level of contributions, unless the employee opts out within 30 days, for those that are non-eligible will not be auto-enroled but do have the right to opt in and if they do you MUST pay the minimum level of contributions, for those that are entitled they will not be auto-enroled but they do have the right to opt in and if they do you DO NOT have to pay the employer minimum if you choose not to.
Records of all communications to every employee must be retained for at least 6 years in case the Pensions Regulator requests to see them.
- Do not prevent or discourage your employees from enrolling in any way
Under no circumstances should you take any action that could be construed as preventing your employees from participating in the auto-enrolment process, if you discourage your employees from participating you can face stiff financial or legal penalties.
- Nominate a contact for the Pensions Regulator
One of the first things that you must do is provide the Pensions Regulator with clear and accurate details about the senior individual in your organisation responsible for auto-enrolment. This individual will most likely be yourself, but if you are a high level manager (rather than the owner or CEO) you will need to include their details to. You can also nominate a secondary point of contact (this may indeed be yourself) in the event that the main contact is not available.
It is your responsibility to enrol the eligible workers on time. You must submit a declaration of compliance to the pensions regulator which informs them that you have a qualifying workplace pension in place within 5 months of your staging date so plenty of time before the regulators start issuing notices.
- Be aware of the penalties for non-compliance
Complying with these new regulations is very important, and if you fail to comply with any of the statutory notices you can be issued with a fixed penalty notice, typically set at £400. The Pensions Regulator can also enact the ‘Prohibited Recruitment Conduct Penalty Notice.’ This is a fee based on the number of staff that are employed by your company, ranging between £1,000 to £5,000.
The penalties may not stop there – the Pensions Regulator can choose to issue an escalating penalty based on the number of staff members that you employ. In this case, you will be liable for a much higher fine if you have a large team of employees, as these penalties can range from £50 to £10,000 per day. You can see how quickly these fees can add up – this could have a significant impact on your business in a very short period of time.
Do you want to make sure that you are in full compliance with the new pensions regulations? Contact the skilled and efficient team at Options Corporate Pensions for a free consultation today. They are here to support companies and make the process simple, and stress free.