Workplace pensions are here to stay – and they’re a legal requirement. Are you up to date on enrolling your staff in workplace pensions? Are you fully informed about them? Here’s our handy advice for enrolling your staff onto a pension scheme.
Keep up to date with enrolling staff in workplace pensions
Auto-enrolment for workplace pensions came into force in October 2012. This means that every UK employer with at least one member of staff was affected. All existing firms had to enrol their staff by April 2017, but all new employers must comply from February 2018.
After saying all this, what does compliance mean for your business?
UK employers must put certain ‘workers’ into a pension scheme and contribute towards it if they are classed as ‘eligible jobholders’.
Directors of a company without employees are not classed as ‘workers’ and would therefore not have any auto-enrolment duties, even if they pay themselves a salary.
Employers’ auto enrolment duties apply to eligible jobholders, non-eligible jobholders and entitled workers.
Regardless of the category of the workers, all organisations with one employee must declare their compliance online with the Pensions Regulator. They also need to complete ongoing duties. This will include continually assessing the workforce, paying contributions and processing opt-out notices.
Contributions for any employee who opts in will be:
1% employer and 1% employee until April 2018.
2% employer, 3% employee from April 2018 to April 2019.
3% employer, 5% employee from April 2019 to April 2020.
It’s the employer’s responsibility to deduct employee contributions from gross salary.
Compliance rests with individual employer, and failure to comply will lead to notice or penalty from the Pensions Regulator. This could even lead to a civil penalty notice if an employer fails to pay contributions that are outstanding, which may be up to £5,000 for individuals or £50,000 for organisations.
In terms of practical day-to-day requirements, most payroll systems can automate the enrolment duties, so it’s worth checking that your payroll system is compatible with your chosen pension scheme.