All employers will soon have to enrol employees on a workplace pension; but according to The Pensions Regulator, only 29% of businesses even know about the 2016 deadline. So let’s take a look at what needs to be done, and why meeting your deadlines is so important.
New pension obligations
Under the government’s new workplace pension rules, all UK employers have to provide a workplace pension scheme. This is known as ‘automatic enrolment’.
Once a suitable scheme’s set up, companies must enrol all UK employees aged 22 and over, with earnings of £10,000 or more per year. Companies also have to pay into the scheme for their employees.
The deadlines for introducing pension schemes, known as the ‘staging date’, will be in 2016 or 2017 – depending on how many people there are on your payroll. You can check you deadline on The Pensions Regulator site using your PAYE reference. If you have an existing scheme, you’ll need to check whether it qualifies.
Meeting the deadline isn’t just about having a pension scheme and enrolling employees on it, however. Companies must collect and keep records of a large amount of data. So much, in fact, that pensions experts recommend small businesses start the process at least six months, but preferably two years, ahead of their deadline.
As a minimum, you’ll be expected to provide employees’:
- Email address
- Date of birth
- National Insurance number
According to Roger Sanders, pensions expert and managing director of Lighthouse Group, it’s crucial that this information is easily available and constantly updated to your payroll systems: because all this data must be brought together each time you pay an employee, regardless of whether that’s weekly or monthly.
The Pensions Regulator aims to “educate and enable you to comply with the legislation”, so seeking help on how to comply is a good idea if you think you'll struggle.
However, the responsibility ultimately rests with your business. If you fail to meet your obligations, the regulator can take enforcement action. This could mean inspections, warning letters, interest charges, initial fixed penalties of £400, and rising fines of up to £50,000. You can also be taken to court.
If cash flow worries are delaying your auto-enrolment plans, contact a Dukes Bailiffs advisor to find out how we can help.