Auto Enrolment is a government initiative aimed at helping individuals save for later life through occupational pension schemes. In the past individuals have missed out on valuable pension benefits, this is typically because their employers did not offer them a pension or they did not apply to join their company’s pension scheme.
In addition to this, the ageing population in the UK continues to increase, and consequently so does the burden upon the welfare state. By enforcing the new legislation the government hopes to encourage more people to save for the future in order to fund their own retirement, thereby reducing the government’s welfare costs.
WHAT ARE THE DETAILS?
When Does This Have To Be Completed?
The date that auto enrolment requirements come into effect is referred to as the staging date, this is when the law comes into effect for the business. These dates vary depending on the number of employees the business had in April 2012. You can confirm your auto-enrolment staging date by using the Pensions Regulator tool here.
Do People On Contracts Who Work In The Office Qualify?
This is dependent upon the type of contract. However if the person has been contracted to perform work or services personally they are likely to be treated as a “worker” under the rules and will therefore be required to enrol, subject to meeting the above criteria.
What NIC’s (National Insurance Contributions) Does The Employer Have To Pay?
Unless using salary sacrifice on NIC’s, these contributions won’t be affected regardless of the pension contributions being paid.
How Do Small Employers Opt-Out?
The clue is in the name, there is no opting out for employers small or large. To dispel the myth, employers must provide a qualifying workplace pension scheme (QWPS) for all employees. The workers will then be automatically enrolled subject to meeting the above criteria. Employees do have the option to opt-out however they must be enrolled in a QWPS initially.
Do Part-Time Workers Qualify?
If an individual is a part-time staff member or a temporary, casual or agency worker, it makes no difference to their right to be auto-enrolled and receive an employer contribution as long as they meet the above criteria.
If A Company Only Has Directors, Do They Have To Be Enrolled?
Businesses with only one director (Single person director companies) are exempt from auto-enrolment duties until they take on a worker. A director is only a worker for auto-enrolment purposes if they and at least one other person in the company have a contract of employment. Therefore a company with two or more directors, but with no workers, will also be exempt unless the directors have a contract of employment or service.
Can The Employer Combine Auto Enrolment With A Tax-Saving Scheme Such As Salary Sacrifice?
Yes. However a great deal of care needs to be taken as the auto-enrolment process has to operate automatically, without requiring any employees to make decisions. Asking employees to make a decision whether to pay contributions via salary sacrifice or not could be viewed as a decision and subsequently a barrier to entry. A great deal of care needs to be taken as to how and when to implement salary sacrifice.
How Do Small Businesses Obtain Advice And Implementation Guidance For Their Auto Enrolment Schemes?
It should come as little surprise that here at Acorn to Oaks Financial Services we believe an adviser is the best solution to auto-enrolment. There is a common misconception that an auto-enrolment adviser is a luxury for those who can afford one. However, involving an adviser in your Auto Enrolment duties can actually work out cheaper for everyone. It’s estimated that implementing Auto Enrolment in-house could cost over 100 working days of staff time. You don’t need us to tell you that that is a lot. We’ve found that many businesses seek our advice after realising how large the workload and cost to staff time is in regards to the new legislation. At Acorn to Oaks, we have already helped a wide range of businesses, large and small, to comply with new auto-enrolment rules. We will guide you through the entire process, advising on which parts need to completed by you, while we do the rest, allowing you to maintain your focus on your business. We will keep you up-to-date with which forms need to be filled out and when, and what data must be collected. Finally, we’ll also help in one of the trickiest parts of Auto Enrolment, communicating the changes with your employees. Put simply, we are there whenever you need us.