Auto-enrolment has been introduced to reform the way we provide for our retirement. The main reasons for this are:
- the annual cost of state benefits to pensioners is projected to rise to £190 billion by 2035/36
- not enough people are saving for their retirement
- we are living much longer.
Auto-enrolment means that in the future, both you and your employees must pay into a pension for them.
what you have to do
You must have everything in place by your staging date. This is the date that the government has assigned to you, and is effectively your start date.
As an employer you need to:
- select a suitable pension scheme and register it with the Pension Regulator
- complete all returns required by the scheme
- make refunds where necessary
- auto-enrol your job holders
- provide the necessary paperwork to the pension scheme
- provide the necessary paperwork to both your eligible and non-eligible job holders
- monitor earnings to make sure the right amount is paid
- process opt outs
- deduct the contributions from their pay
- register and re-register your workers throughout the year
- provide regular communication to your workers.
what you are not allowed to do
Now here’s the ‘can’t do’ list and there will be stiff penalties imposed on you if you do.
You are not allowed to:
- offer investment advice to your workers
- discourage them from joining the scheme
- give opt out forms to them
- encourage opt outs
- use prohibitive recruitment conduct – in other words, favour applicants who will opt out.
Your duties vary depending on the type of workers you have, their age and their earnings. Essentially, they fall into three categories and your obligations vary from category to category. Just get in touch with us if you’d like us to explain this in more detail.
selecting the scheme
The pension scheme you select must be a Qualifying Workplace Pension Scheme (QWPS). Your existing company scheme may already be suitable, or you may need to choose another one.
The level of contribution is being phased in over the next few years, and you have a number of options to choose from. From October 2017 the contribution levels are quite substantial. By then, the employer will be contributing 3-4% of salary depending on the options chosen, and the employee will be paying 4-5% into the scheme.
Your workers can opt out of these payments if they choose to, but please remember that they must do this on their own, without your assistance. If they do, then your employer contribution stops too.
how Mitten Clarke can help you
With an established and wealth management team, we are well placed to deal with auto-enrolment for you. We can do as much or as little as you need us to from our offices in Staffordshire – whether it’s just setting the scheme up for you, or managing it each month on an ongoing basis.