Preparing Your Small Business for Auto-Enrolment

Over 800,000 businesses will reach their auto-enrolment pension staging date this year, which is almost double the amount of businesses that did so last year.

The “staging date” refers to the deadline by which businesses must automatically enrol their employees in a workplace pension. Many small businesses have likely not considered pensions, but it’s important they educate themselves quickly as failure to comply with these rules could bring high penalties.

Managing Auto-Enrolment

The scheme has proved successful so far, with over 4.4 million new pension savers being created since 2012, however small business owners are not too optimistic about having to provide workplace pensions with over 50% saying they felt it would be a burden. Despite this, a recent poll revealed that the majority of small companies plan to manage auto-enrolment themselves, without the assistance of an accountant or adviser. If you are planning to manage this by yourself, make sure you carry out the following…

Find Your Staging Date

The final staging dates for auto-enrolment are listed below…

Employee count or PAYE No. Staging Date
Employer who does not have a PAYE scheme 01-Apr-17
Companies with zero employees unless otherwise described 01-Apr-17
Companies with fewer than 30 employees with the last 2 characters in their PAYE reference numbers 84-91,93-99 01-Apr-17
New employer (PAYE income first payable between 01 April 2012 and 31 March 2013) 01-May-17
New employer (PAYE income first payable between 01 April 2013 and 31 March 2014) 01-Jul-17
New employer (PAYE income first payable between 01 April 2014 and 31 March 2015) 01-Aug-17
New employer (PAYE income first payable between 01 April 2015 and 31 December 2015) 01-Oct-17
New employer (PAYE income first payable between 01 January 2016 and 30 September 2016) 01-Nov-17
New employer (PAYE income first payable between 01 October 2016 and 30 June 2017) 01-Jan-18
New employer (PAYE income first payable between 01 July 2017 and 30 September 2017) 01-Feb-18

Find Out Who Needs to Be Enrolled

Not all employees have to be enrolled automatically. All staff aged over 22 (and under state pension age) earning more than £10,000 must be enrolled automatically. Those aged between 16 and 74 earning less than 10,000 but over £5,824 can request a workplace pension. As can those earning over £10,000 between the ages of 16 and 21 or between state pension age and 74.

Talk to Your Employees and Manage Pensions

Explain the process and continually manage and communicate with your team. You need to monitor ages and earnings of staff, requests and opt-outs of the pension scheme - continually keeping records as you go. If you fail to assess your staff regularly and explain processes, you could incur a small fine. You must also submit a declaration of compliance to the Pensions Regulator within five months of the staging date.

Take Advice if You Need to

Choosing a provider is not simple, and you may be charged signing up fees as well as ongoing fees once you have registered. Continually managing the process can be tricky too, and mistakes could result in failure to comply, which then incurs fines. Taking pensions advice could ensure that you actually save money and carry out your duties properly.

If you would like more information on auto-enrolment and complying with these rules, please get in touch and we would be happy to discuss it with you.