Auto Enrolment – how to get ready and stay compliant

Auto Enrolment – how to get ready and stay compliant

What is auto enrolment?

Automatic enrolment requires virtually every UK small business to automatically enrol qualifying employees onto a suitable workplace pension scheme and make regular contributions to it on behalf of those employees.

 What must UK businesses do for auto enrolment?

  •  Know your staging date – businesses have been ‘staged’ into auto enrolment since 2012 and the process has now reached the micro-business level
  • Create a plan – be sure your business is prepared – working with a specialist consultant, outsourcing your auto enrolment and/or using payroll software are all ways you can be auto enrolment compliant without headaches
  • Remember to reassess – this has to be done every pay period. All your employees need to be assessed to ensure they qualify for the next period of auto enrolment: age, hours worked and payment received are all criteria that must be checked
  • Inform all workers – this includes all new workers. Once you’ve entered the auto enrolment process you must remember to communicate with new employees and any who cease to be eligible
  • Complete a declaration of compliance – records have to be maintained for six years and The Pension Regulator requires you to complete your declaration within five months of your staging date
  • Maintain contributions to workers’ pensions – when the scheme began in 2012, contributions were 2% but phasing means they will reach 8% by October 2018.

Which businesses must implement auto enrolment?

At this point in the staging process it is SMEs who are being required to become auto enrolment compliant. So called ‘micro-businesses’ are dis-proportionally hard hit by auto enrolment because there is an increased administrative load at the beginning but the continuing burden of reassessment is proving challenging to smaller organisations and those with little administrative capacity.

Ensuring your business remains auto enrolment compliant

Auto-enrolment isn’t a one-off deal. Keeping up to date requires continuous work. Every business must:

  •  Maintain up-to-date records for employees and their pension scheme
  • Record changes to employee circumstances – this is usually done through payroll software
  • Establish who should be put into the pension scheme every month
  • Enrol or dis-enrol writers and inform them in writing
  • Inform and enrol (where necessary and unless they opt out) new workers
  • Make contributions to the pension scheme
  • Auto re-enrol employees – by law every employer has to undertake auto enrolment every three years, which means repeating the processes and undertaking the same duties that were part of your original date.

The costs of non-compliance

Non-compliance may lead to a number of penalties including:

  1.  Compliance notices and penalty notices (which carry fines)
  2. Late compliance requires an employer to pay any missed contributions so employees are restored to the position they would have been in if compliance had been met
  3. Failure to pay fine means that the regulator can recover the debt through the courts.

Auto-enrolment doesn’t need to be a headache

If all this information has left you reeling – don’t despair! While it can seem an impossible task to get on top of auto enrolment, we provide a complete managed service that removes the headache and ensures you, and your employees, get the best from auto enrolment.

Get in touch with us today, to talk about our auto enrolment service, call us on 01737 652 221. Let us be Your Finance team.

We are a member firm of the Institute of Chartered Management Accountants and a certified Xero advisor

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