AUTO ENROLMENT: Guide
According to research new pension rules will cost small businesses £8,900 each (Centre for Economics and Business Research CEBR).
Although widely welcomed as an important way to encourage employees to save for retirement, for small businesses auto enrolment has certainly become a foreboding issue. Lack of clarity surrounding approved pension schemes, scarce central government guidance and the unknown but foreseeable costs in the future is increasingly a pressing concern for employers.
One of the over-arching worries for small business owners is “Will this be the straw that breaks the camel’s back?” With soaring energy bills, annual hikes in minimum wage rates and the continuing costs of staying on top of your game, employers are now obliged to make pension contributions too. Let’s face it, budget and expenditure forecasting has certainly been placed on roller skates!
But fear not – auto enrolment uncertainty can be slayed and understanding the concept of change management can help relieve the stress. By constructing a planned approach to achieve your desired goal and taking appropriate steps to eliminate or demystify predicted hurdles can certainly help you plan for the future and do so with confidence.
So, walk with me through a simple overview of auto enrolment and how not to panic.
First know when it’s going to hit you
All businesses will have a deadline (staging date). Understand when you will have to ‘go live’ with automatic pension enrolment for your employees. Find out your staging date and start to plan for this deadline well in advance.
Make a plan of attack
Learn and understand what is expected of you as an employer and plan your route to achieve each stage. The new rules confer several key responsibilities on all employers. You must:
• Provide a qualifying workplace pension scheme
• Register with and provide details of the scheme to the Pensions Regulator
• Automatically enrol all qualifying workers into the scheme
• Make contributions into the scheme for all qualifying workers
• Provide relevant information to all qualifying workers
Our short guide “Auto enrolment for employers” can help you plan your project.
Calculate how much it is going to cost you
It is important to understand that you will be required to make minimum contributions for all eligible workers. These will be phased in, gradually increasing until October 2018.
You can work out your relevant minimum contributions using the Pensions Regulator’s tool.
Choose a scheme that meets your business needs
Small organisations may choose to outsource their scheme to a private provider or use the government’s own provision.
The government scheme is called the National Employment Savings Trust, or NEST. It has been designed for automatic enrolment, and may provide the most cost effective solution for small businesses. The benefits are
- It is fully online
- Administered through a designated online dashboard.
- No set up charges
- Low costs for members
- Employers only pay contributions
- Low charges levied on individual members
- Guidance and countdown emails available If you sign up for NEST now.
Private pension providers may be more suitable for your long term business needs and It is important to understand that NEST is not the only available option. So if in doubt you may wish to seek independent advice before making a decision.
Get your internal systems and processes organised
There really is no benefit with you knowing all the information and everyone else wondering what is going to take place. Communication is king! Make sure your staff know where they are heading and how you are going to achieve this. Robust and well scripted internal systems and processes are key in ensuring your administration and payroll staff are fully engaged and will help to remove their fear of change or concern about added responsibility.
What are your auto enrolment concerns? Do you worry it is going to cost you your business? Or is it another administration job you could do without?
As dedicated payroll providers we can help you remove the burden of auto enrolment processing – so call us now and have a chat. 0117 9328145.