TTR Barnes

Unless you’ve been impersonating an ostrich and burying your head in the sand, you will have heard of automatic enrolment and the requirement for business to provide, and contribute to, a pension scheme for employees.

In addition to new regulations, there is as usual, a whole new vocabulary to get used before you can begin to prepare. For those of you who think it will be years before it applies to you; you’re wrong. Some aspects of the legislation apply to you now.

There’s a lot for every business to consider including: ‘What is it going to cost me?’, ‘what is my staging date?’, ‘How do I explain auto enrolment to my staff?’. There isn’t space here to go into detail about the new regulations, so we have merely tried to clarify some of the basic vocabulary, highlight your obligations as of now, and provide an initial roadmap of what you will need to do to prepare for your Staging Date.

First; your Staging Date. This is the date from which you will be required to provide a pension to your workforce, and contribute where appropriate. Within your  workforce, there are potentially 3 types of ‘Worker’ under the new regulations; Eligible jobholder, non-eligible jobholder, and entitled workers. The categories
are defined by the age and earnings of the individual and each require different treatment under auto enrolment. Below is a table that shows which is which.

It’s important to understand that a self-employed person for tax purposes may be classed as a Worker under auto enrolment, so be careful when assessing your workforce.

The main steps Employers should follow to prepare for auto-enrolment are:

1. Know your staging date. There’s an interactive tool available on The Pensions Regulator website at www.tpr.gov.uk to help you find your staging date. You will need to know your PAYE scheme reference and how many people are on your payroll in order to use it.

2. Assess your workforce. You need to decide if you have any eligible workers and your duties towards them. If you have more than one employee (possibly including yourself), then you will fall under the new requirements.

3. Review any current company pension arrangements, and decide whether to adapt your current scheme or set up a new one.

4. Communicate the changes to all your workers, explaining what auto enrolment means for them.

AFTER YOUR STAGING DATE YOU MUST:

5. Automatically enrol eligible jobholders into a pension scheme

6. Register with The Pensions Regulator within 4 months of your staging date.

7. Contribute to your workers’ pensions.

8. Collect your Workers’ contributions.

Further information about enrolment, opting out, opting in etc. is available on The Pensions Regulator website.

There’s also provision for employers to exercise
‘postponement’ whereby they elect for some, or all, eligible workers’ enrolment into the scheme to be postponed by 3 months. There are a variety of conditions attached to this provision, so think carefully before deciding to adopt it. The Pensions Regulator will write to everyone 12 months before their staging date, and again 3 months before, but it would be wise to prepare as far as possible beforehand, even if only to identify whether you have a ‘workforce’ for auto enrolment purposes (i.e. 1 or more eligible jobholder).

In the meantime, a variety of ‘safeguards apply to all businesses now. These involve Employers ensuring that a qualifying scheme remains in place and eligible workers are enrolled in it when the time comes, not inducing workers out of qualifying schemes, and ensuring that their recruitment policies do not allow any questions that state or imply that employment could be dependent on whether the applicant intends to opt out of the
pension scheme.

There’s a lot to think about and to do in order to be ready for your staging date. If you have any questions about what you need to do as a business, the type of scheme you need, or whether your current scheme can be adapted to comply, please contact George Farnan.