Not so long ago, the introduction of auto enrolment for workplace pensions seemed an age away, but with the majority of small businesses becoming liable in either 2016 or 2017, this will soon become a big issue to anybody that has employees.
So what are the options for small businesses, and how should they go about sorting this out?
1. Find out your staging date!!
The most important thing for any small business to do is to find out your staging date well in advance, in order to give yourself as much time as possible to prepare. Unfortunately, this isn’t going to go away, so it is best to face your fears and get a plan in place to deal with it!
You can find out your staging date here http://www.thepensionsregulator.gov.uk/en/employers
2. Decide on the course of action that is best for you
Here at Colmer Winchester we see that there for our clients there are three main options to choose from when implementing the workplace pension:
· Use the default scheme NEST
NEST is a public service company that has been licenced by the Government to provide automatic enrolment pensions. These are tracker based funds that are passively managed, meaning that you are unlikely to get the best return on the investment. For the majority of small business though, this is likely to be the best option. The provision of the default NEST scheme is not a regulated activity, and we can assist you in the setting up of this pension scheme.
· Set up a company specific pension scheme
These are provided by a pensions company (the likes of Standard Life, Aviva etc) and delivered via an IFA. If you want to explore this option then please be aware of the costs that may be involved, and be clear from the outset what the IFA or pension company will charge.
If you wish us to put you in contact with an IFA, please get in touch as we have a couple of excellent contacts.
· Special exemptions
The legislation currently states that Director only companies are exempt from full auto enrolment reporting, providing that NONE OF THE DIRECTORS HAVE A CONTRACT OF EMPLOYMENT. Please be aware though, that exemption needs to be claimed, and a Declaration of Compliance will need to be completed every three years.
We are able to assist if your company fits this criteria, please get in touch with us for more information.
3. Reporting auto enrolment
Once you have your scheme chosen, you will then need to consider how this is to be reported. This will need to be reported on a monthly basis (similar to current Payroll RTI functions) Do you have the necessary software to enable you to do this? Have you considered the cost of reporting this internally? As an example, Sage Payroll with the auto enrolment module will cost £638 + VAT per annum! That isn’t a cheap option!
Now might be the time to outsource this function, and take away the hassle of monthly reporting. We can take this off your hands, please get in touch if you would like a quote.
Auto enrolment is going to need a significant investment of your time, regardless of which option you choose, and failure to comply has a daily penalty of £50 to £10,000!! It is the Employer’s responsibility to comply, but this is something that we can assist with.
Give us a call and we can plan the right way forward for you.