By August this year, more than 21,000 employers had automatically enrolled more than four million staff into a workplace pension, but even bigger numbers are still to come.
More than one million small and micro employers with between 1 and 50 staff will need to implement automatic enrolment.
Knowing the numbers
The Pensions Regulator recently published the staging profile which shows the numbers of employers reaching their staging date in the coming months. The staging date is a date set in law and is when an employer’s duty comes into effect.
This should not be used by employers themselves, but is a resource for the pensions industry, including accountants and other advisers, to help them prepare for the numbers of employers seeking services and advice.
What you need to know
You should beware that The Pensions Regulator is responsible for ensuring employer compliance with automatic enrolment and that the Regulator’s website should be the first port of call for information.
The Pensions Regulator has recently published an Essential Guide to Automatic Enrolment, which will help you to understand your responsibilities.
Automatic enrolment is a legal duty
All employers, no matter how large or small, have a legal duty to automatically enrol eligible staff into a workplace pension and must do so by a deadline that is specific to them. Failure to comply could lead to financial penalties.
Clients should know their staging date
Employers can find their staging date by using the Regulator’s staging date tool. You can also do this on your client’s behalf. Staging dates are set based on information held by HMRC in April 2012; this may not reflect current headcount.
Nominate a contact
Employers must nominate a contact who will manage or implement automatic enrolment and who the Regulator can write to and email as the primary contact. This should be the most senior person within the business. They should then decide who else needs to know about automatic enrolment on a regular basis and nominate them as a secondary contact. This may be another member of staff, payroll provider or indeed their accountant.
Warn the employer to leave plenty of time
The handy timeline planner on the Regulator’s website shows what needs to be done and when. While the size of the business and the level of pensions experience will decide how long an employer will need to implement automatic enrolment, clients should err on the side of caution and leave more time, than less. The Regulator recommends employers leave around 12 months to prepare. Leaving enough time will help avoid complications and the risk of non-compliance.
Six month checklist
The Regulator’s website includes a handy ‘six month checklist’ which clients can use to ensure they are on track. By six months before their staging date, employers should have their provider and payroll plans in place. With thousands of employers all seeking services, it makes sense to start looking early. The experience of other employers also shows it is also imperative to test systems to avoid stressful last minute glitches and the risk of non-compliance.
Employers must assess all their staff
Employers will need to understand how to assess their workers for automatic enrolment. They are likely to look to their accountant to help them complete the task – or to establish whether the payroll and pension provider can offer assistance or do this for them. Employers must also communicate to their workers about how automatic enrolment will affect them, as individuals.
Registration: a declaration of compliance
Five months after their staging date, employers must show they have complied with their automatic enrolment duties by completing a declaration of compliance (registration) with The Pensions Regulator. This is a statutory duty and each employer has a specific day by which to do this. If they fail to meet this deadline they could be liable for a £400 fine.
Nominate a contact
Six month checklist
(article by ACCA, edited)