What is automatic enrolment, and does it apply to me?
If your organisation employs one or more people in the UK, then automatic enrolment will apply to you. Every employer is required by law to enrol certain workers (typically employees between age 22 and state pension age, who earn over £10,000 p.a.) into a suitable workplace pension scheme and contribute towards it. This is called ‘automatic enrolment’.
When do we need to be ready?
Organisations with 30 employees or fewer should be getting ready now, as automatic enrolment can be complex and time-consuming. Every organisation has been given a ‘staging date’ and you must have your pension scheme in place by this date. You can check your staging date here.
Employers who don’t comply could face a range of fines, starting with a fixed penalty of £400, escalating to fines of at least £50 per day for non-compliance. Even If you already operate a pension scheme, you need to ensure it meets the qualifying criteria.
What do we need to do?
By your staging date you need to:
- decide what contributions rates you will use and whether these will be the same for all workers
- review any existing workplace pension arrangements you have
- establish a workplace pension scheme that meets the automatic enrolment requirements
- decide what, if any, postponement rules you will apply
- ensure you have processes in place to deal with both your initial and ongoing employer duties.
How much will it cost?
The amount an employer has to contribute every month will vary. Minimum payments currently stand at 1% for both employees and employers, but by October 2018 contributions for eligible employees must total 8%, with the employer paying at least 3%. You also need to factor in the costs of setting up a suitable pension scheme, changing payroll arrangements, admin and more.
Where can I go for help?
There is lots of useful information about automatic enrolment on our Easy as AE website – click here to visit the site. Easy as AE is a cost-effective online solution, from just £999 + VAT (or £899 + VAT for existing Lucas Fettes & Partners clients or NCVO members).