By the time you read this, every company in the UK that employed more than 5,000 employees on 1st April 2012 will have already had its staging date for the auto enrolment into the new Work Based Pension Scheme.
This means that each business above the stated size should now have their company pension scheme for all eligible employees in place and fully functional.
And for those who employed less than 5,000 people on the set date, staging dates are looming.
Yet a vast proportion of business owners are still unaware of what is required.
What Is the Work Based Pension Scheme
Under new legislations from the National Employment Savings Trust (NEST), every business that employs even a single eligible individual will have to offer an acceptable level of pension facility by 2017.
Not only will this pension scheme allow the employee to contribute to their financial future, but employers across the country will also be required to make compulsory levels of contributions as well.
This means that even if the staging date for your business is not until 2017, it is essential to start preparing now, to ensure that everything has been implemented and budgeted for in anticipation of the deadline to come.
The Next Steps
Before your auto enrolment deadline, not only do you have to choose an appropriate pension scheme for your employees, but you also have to advise them of the arrangements you have made and put the systems in place to ensure the scheme can be managed effectively.
Start by confirming your staging date
If you don’t know the exact deadline for your company, check the staging date timeline to ensure you are fully prepared.
Ensure you understand exactly what is required of you by that date and that you are aware of the criteria for your business.
If your staging date is not appropriate for your working calendar then you can bring it forward, but it cannot be pushed back.
Assess your workforce and understand your liability
Currently anyone over the age of 22 years who earns more than £8,105 per year and doesn’t have an existing pension will be eligible. Initially they will qualify for a 1% company contribution to their pension, but this will rise incrementally until October 2018 when the minimum employer contribution will reach 3% of gross income.
Choose Your Pension Scheme
If you don’t have an existing pension facility in place it is essential to choose a scheme and register all eligible employees on it.
For companies with an existing pension plan, it is vital that the scheme is fully assessed to ensure it meets the new criteria.
Company contributions will start on your staging date, but employees can opt to be paid in sooner if they so wish.
After the set deadline, employees will be required to pay a 0.8% contribution, made up to 1% via tax benefits. However this amount will increase to 4% minimum employee contribution before tax relief by October 2018.
Speak with an independent financial adviser today who can advise you on every aspect of your auto-enrolment obligations and help set up a compliant workplace pension scheme for your business.