Automatic Enrolment (AE) was initiated in October 2012. Any employer no matter what size their business is now legally obliged to offer their employees a pension scheme. All qualifying individuals between the ages of 22 and 65 can save for their retirement.
AE is about instigating the urge in individuals to begin creating provisions for their retirement. There is extensive guidance from the Pensions Regulator in getting employers ready for their staging dates.
Research by the Pensions Regulator revealed that nearly two-thirds of UK small businesses require help and contact an advisor. So far, 79,000 employers have completed their declaration of compliance with the Pensions Regulator.
It is vital that small businesses plan for AE and comply with AE regulations. This would avoid unnecessary penalties imposed by the Pensions Regulator.
It is important that the Pensions Regulator is informed who is the contact point on all matters AE.
Small businesses should allow time on the choosing which pension scheme would be suited to them. The decision on a suitable scheme should be made six months before AE commences. There are various pension schemes, it is important to research well. It may be worthwhile seeking the help of an Independent Financial Advisor.
Employers need to identify eligible employees to be added to the scheme. This is on the based on their gross monthly income. There is good payroll software that has features that will simplify the work involved in the AE process. It will identify out which employees need to be included in the scheme.
Six weeks before the staging date employees need to be informed they will be enrolled in AE scheme.
Employers need to declare their compliance with AE to the Pensions Regulator. Employers responsibilities do not end after the staging date. They need to assess their employees for AE continuously and deduct appropriate payroll contributions and maintain AE records.