News

News

Date: October 2012

Auto-enrolment: a brief summary

In force from October 2012, this legislation places the onus of pensions firmly onto the employer by making them “auto-enrol” all relevant workers into a qualifying pension scheme.

For many small employers (less than 50 employees) the compulsion to meet this legislation will not happen until the middle of 2015, thereby meaning that we have plenty of time to plan and implement an appropriate strategy to meet the demands of this law. Each employer will have their own “staging date” to when they must first comply.

Apart from the auto-enrolment of employees & workers, there will also be a requirement for both employer and employee to contribute to the scheme. The minimum contributions are 3% employer, 4% employee & 1% by way of tax relief paid directly into the individuals’ pension pot. Again these minimum contribution levels will be “phased in” over the first 3 years after the company’s staging date. 

How does the Pension Act 2008 affect your business?

  • Employers are for the first time required to automatically enrol eligible employees into a pension scheme.
  • Employers are now required to pay pension contributions for any employees who join and stay in the pension scheme.
  • The Pensions Regulator will police and enforce these new laws.
  • Even if you have an existing workplace pension scheme, you may have to make changes so that it complies with the new laws.

Aside from the financial consequences of auto-enrolment, employers need to be prepared:

  1. Identify your staging date, i.e. when you need to be ready.
  2. Make an initial assessment of the workforce to understand who is or isn’t eligible.
  3. Ensure pension scheme is in place for automatic enrolment (existing, new or NEST).
  4. Get information ready for both regulators and employees.
  5. Set up payroll and ensure it can meet the demands.
  6. Get ready to manage opt-ins & optouts, joiners and leavers.
  7. Arrange record-keeping, which must be robust.
  8. Make a formal assessment of the workforce and finalise the data.

If you’re wondering: How much will I have to pay? Are my existing arrangements acceptable? How does this affect my freelance and contract workers? What is “auto-enrolment”? Then get in touch!

How we can help? At La Playa Financial Management we understand your organisation; we can help lessen the pain by…

  • Reviewing your existing pension scheme to comply with the new laws
  • Helping you offset the financial impact of these new laws on your organisation through smart approaches such as salary exchange
  • Helping you put a scheme in place, if you don’t have one!

We’re able to offer advice through the entire solution, as well as providing ongoing information and support. We’re also happy to offer a free, no obligation review of any existing arrangements you may have, and when and how this legislation will affect your organisation.

Contact Henry Metcalf for more information, henry.metcalf@laplayawealth.com or 01223 200674.

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