What do employers need to do about auto enrolment?
From 1st October 2012 the Government have introduced the auto-enrolment pension provisions for employers who employ qualifying jobholders.
The below is a basic description of the steps employers will need to take to prepare for auto-enrolment. The below is a brief overview of the steps to take, but there are specific timescales to be adhered to and tax and employee implications for employers who are being affected by auto-enrolment. It is always a good idea to take specific advice on both your accounting and legal obligations.
Confirm your staging date. The Pensions Regulator http://www.thepensionsregulator.gov.uk/ has published a staging timetable setting out the staging dates that will apply for employers over the five-and-a-half-year staging process.
Assess your workforce to determine which categories of individuals will be automatically enrolled and who will be able to ‘opt-in’.
Review your existing pension scheme and decide it counts as a qualifying scheme.
Decide whether to use a postponement period (Essentially a three month waiting period before enrolling) and if you do decide to postpone work out who should this apply to.
Prepare standard-form documents, including opt-out and opt-in member notices to give to your employees.
Contracts of employment
Review standard-form contracts of and include wording about auto-enrolment and data protection. This will be important for any new employees as existing contracts may not be compliant with the new rules.
Set up auto-enrolment payroll processes and make sure you are prepared to refund money to those who opt out. Remember to consider tax implications for both low and high earners.
For any new staff make sure you have up to date compliant contracts to offer to new employees. Remember on interview that you cannot induce new staff to opt-out of the pension by offering, for example, a bonus.
Always keep good records, and comply with the registration requirements of the regulator.