If you have employees you will be affected

Derrick Laver

Derrick Laver

Derrick Laver, of Laver Financial, discusses the reforms of the pension system in the UK.

In carrying out the biggest reform of pensions in the UK for decades the government has introduced Auto Enrolment, and every UK employer will be affected.

By April 2017 every person who currently has employees in the UK will need to have a pension scheme in place.

Employers will also need to enrol their workers into the scheme and make contributions on their behalf.

No HR personnel

The compliance requirements are the same whether you employ 1,000 employees or 1, the difference being that larger companies will have HR personnel, small companies will not.

The legislation puts the onus fairly and squarely on the employers to operate Automatic Enrolment correctly for their employees.

To back this up there is a series of penalties and fines, which if corrective action is not taken, can add up to a substantial amount.

Staging date

The ‘staging date’ is the date from which each employer is subject to the rules of Automatic Enrolment and, as far as the employer is concerned, creates a timeline with a series of activities both before and after this date.

This date has already been reached by the UK’s largest businesses meaning they are now already subject to this new legislation. Between October 2013 and May 2014 all employers with more than 50 employees and fewer than 1,300 will reach their staging date.

Will affect 40,000 businesses

From I June 2015 until April 2017 all companies with fewer than 50 employees will be arriving at their staging date; it is estimated this will affect some 40,000 businesses in the early months, increasing to 60,000 as we approach April 2017.

The planning process for Auto Enrollment by an employer is said to take approximately 18 months, this is the feedback from the larger firms who are already subject to the legislation.

So, for many of the smaller companies whose staging date is June 2015 – this process should start this Christmas!

All schemes to be reviewed

Do not be fooled into thinking that as an employer who already offer your employees a pension scheme that you are exempt, this is not the case.

All existing schemes will need to be reviewed to determine if they meet the new qualifying conditions, if not changes will have to be made.

So, make sure you are prepared, Auto Enrollment is not going to go away, protect yourself as an employer by planning for it early.

The first step is to identify your specific staging date.

This is based on your payroll size and Employer PAYE reference number, once you have this you can begin to plan.