Are you ready for Pensions Auto Enrolment?

Andy Holder, Dip PFS, Managing Director of JM Glendinning Financial Services explains the new pensions legislation:

If you’ve not already been affected by the new pensions legislation, your company will need to comply by a prescribed date between 2014 and 2017. The Pensions Regulator (TPR) will have set a date by which your qualifying workplace pension scheme needs to be implemented, known as your ‘staging date’. You can’t avoid the staging date but you can postpone the first payroll assessment by up to 3 months. Missing the deadline could result in heavy fines for your business.

TPR will write to you 12 months before your staging date, but the sooner you find out your staging date and think about your implementation plan the better. There is more work involved than many people realise. For example, you will probably need to make changes to the way you run your payroll, and there is a lot to consider in terms of staff communications. The importance of starting the process early can’t be overstated.

What do I need to do?

In short, the new pensions legislation means that you will have to automatically enrol certain staff into a qualifying workplace pension scheme, and make contributions to their pensions. The first step is to find out your ‘staging date’ – which is the date on which you need to comply with the legislation. Everything hinges on that date, and once you know it you can start to map out your implementation plan.

We recommend that you start to plan 9 to 12 months before the staging date. This may sound like a long time, but when you consider what needs to be done, suddenly it doesn’t seem like a long time at all. Many industry commentators are predicting a ‘capacity crunch’ from insurance companies and providers, as more and more smaller employers reach their staging dates, so there may be less choice if you leave it late.

Why do you recommend 9-12 months?

Within that 9 to 12 months, whether you work with a Financial Adviser or not, you will need to do the following:

• Assess your workforce and decide what definition of earnings to use to run the scheme.
• Decide whether you are going to postpone the first payroll assessment.
• If you have an existing scheme you will need to check whether it is fit for purpose and whether the provider will accept the scheme for auto enrolment.
• If you don’t have an existing scheme you will need to research the market for a suitable provider.
• Start engaging with your payroll provider to determine how much of the process they can assist with and start considering any changes which may have to be made.
• Communicate the process to your staff, making them aware of the statutory requirement imposed on you as the employer.
• Implement the scheme and ensure your payroll systems are aligned with the provider to help you assess the workforce at each payroll date. This is vital so that those jobholders who become eligible are automatically enrolled.
• Issue statutory employee communications at the staging date as prescribed by TPR.
• Ensure your systems and processes are robust enough to cope with opt outs and refunds.

Most of the above needs to be in place before implementation, so to avoid unforeseen issues our advice is to start early. This will leave you free to get on with running your business, and will give you or your adviser sufficient time to implement a suitable scheme for your business.

Where do I begin?

As independent financial advisers (IFAs) we can help you with this process. As long as you act early and provide the information required we can help you to implement a qualifying workplace pension scheme that suits the needs of your business and your employees.

Call us on 01943 876631, or contact us through our website for more information.