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The scheme may have been around for several years but small to medium sized firms need to start taking note of auto enrolment as deadlines are looming. All companies across the UK -whether they employ 1 person or 100 - must have enrolled their staff into a pension scheme by November 2017.
But many businesses have a much earlier cut-off date by which time they must have enrolled their workers. April, May and June 2017 may seem like a long way off now, with Halloween, Bonfire Night and Christmas to contend with first, but don't be tempted to put auto enrolment off.
The legislation that introduced the scheme dates back several years but only in recent months has it started to have an impact on small to medium sized firms, and their staff. Under the Pensions Act 2008, the law governing workplace pensions changed.
The law now states that every employer in the UK must put staff into a pension scheme and contribute towards it. The Government also chips in every month by providing tax relief. This is what is known as auto enrolment.
The system applies to those aged over 22, but under the state pension age, who earn more than £8, 105 a year. There are some exceptions, however. Those who are already in a private pension scheme will not be enrolled, and those who are eligible can chose to opt out.
Every employer across the UK will be issued with a staging date – the exact day when all their staff must be enrolled in a pension scheme. These staging dates are set in law so if a firm does not hit their target, they could face financial penalties.
With this in mind it is imperative that companies are taking action in plenty of time to ensure they can meet their staging date. The process is a long one with companies being advised to allow 9 – 12 months to get everything in place, so it is really important for employers not to put off auto enrolment, or leave it to the last minute.
Companies that don't comply with the new legislation, or miss their staging date, can face different types of action, as enforced by The Pensions Regulator. This can include informal action, such as guidance and instruction issued by phone, email or in person, or a warning letter.
At the other end of the scale, businesses can be hit with a penalty notice. These are issued to those that persistently or deliberately fail to comply with legislation, and can reach up to £50,000, and in some cases The Pensions Regulator can take employers to court.
All employers should have already received a letter informing them of the auto enrolment process, which gives more details about getting started. You can begin the process by establishing what your duties as an employer are, which depends on your circumstances and that of your staff.
The Pensions Regulator has come up with an online duties checker that can help you make a start but you will need to have some details to hand, including your PAYE reference and the code from your initial letter. This will tell you what your duties are and when you need to complete them by.
At AMR we have teamed up with The Pension Counter – who specialise in auto enrolment – to help our clients with this process. Our team is on hand to help and support any business, no matter their size, through the new legislation and help them hit their staging date.