Time to get ready – pensions auto-enrolment is coming soon. Medium-sized and then small businesses are about to encounter one of the biggest changes to employer pensions we’ve ever seen.
Staging dates for businesses with 50 – 249 employees start tomorrow (1st April 2014) . But even businesses with fewer than 50 employees need to start preparing now. The size of the changes mean that it could easily take a year to prepare.
We’ve heard over and over again that we’re an ageing population, and the statistics are frightening. Currently there are four working people for every pensioner, but in 40 years time, there will only be two. So auto-enrolment is the Government’s answer – delivering a massive boost to the number of people with personal pension provision.
All employers will receive a letter from the Pensions Regulator one year ahead of their staging date, and I’m afraid to say there is a reason for the 52 weeks notice. Many companies will need to choose a scheme for their staff, then assess which staff are eligible and write to them (both eligible and non eligible) to explain the process. Companies will then have to keep an eye on who becomes eligible so that they can be automatically enrolled. For example 20 year-olds approaching their 21st birthday (the age of eligibility).
Most companies will find that auto enrolment isn’t simple. But citrusHR can signpost you to sources of detailed advice. Some of those advisors can administer the schemes for you, or at least talk you through how to do-it-yourself.
The introduction of auto-enrolment has seen some pension providers switch off their offering to employers, arguing they won’t make sufficient return. Others have adapted their offerings. Therefore it’s important if you already have a stakeholder pension scheme in place, that you check it meets the criteria for auto enrolment. The scheme set up by the Government, NEST (National Employment Savings Trust,) has a very useful website, providing template letters, guidance and videos.
You can find out your staging date by logging on here. All you need is your PAYE reference number.
I have summarized below the timeframe in which your business is likely to be affected, based on number of staff. But don’t rely on this alone, do check your staging date through the pensions regulator.
|Number of employees||Date|
|50 – 249||1 April 2014 – 1 April 2015|
|> 50||1 June 2015 -1 April 2017|
|New businesses from 1 April 2012||1 May 2017 – 1 February 2018|