The rules on workplace pensions have never been easy to understand. When taking on a new job, people may be interested to know what (if any) contribution their employer will make to their pension. Some employers may not always have a clear understanding of the obligations that they owe to their staff when they enter into an employment contract with staff.
What is pension auto-enrolment?
The government's auto-enrolment project was first rolled out in 2012 – but only large companies were affected at first. Small companies joined the process in 2015, with all existing UK companies enrolling by April 2017. New businesses that were set up after 2012 have slightly longer to go through the auto-enrolment process, with start dates for these organisations staggered from May 2017 through to February 2018, depending on when they were set up. At the moment, only businesses that are set up from October 2016 onwards will auto-enrol in 2018. For all existing small businesses, the staging dates will happen throughout 2017.
What is your staging date?
Your staging date refers to the day that auto-enrolment comes into effect for your business and it is dependant on the size of your payroll. The Pensions Regulator has a handy calculator that will work it out from your PAYE reference. For your information, the smaller the business in terms of staff numbers later your staging date will be, and if you only recently set up as a small business, your starting staging date will be even later again.
Take time to choose your pension scheme
Many insurance firms have been proactive in offering workplace pension schemes for small businesses for a number of years now. It should be noted though that some schemes will be more limited in terms of investment options than others, and can be more expensive, so take the time to decide which scheme is right for your staff. However, as the deadline fast approaches demand for access to insurance firms is going to rise, so getting staff enrolled on to a scheme well ahead of time is advised.
Set a budget
Budgeting for your staging date is essential, particularly for small business owners who may already have restricted cash flow. To begin with, business contribution levels are set quite low, but by 2018 employers must pay a minimum of 3% of basic pay per employee into a pension scheme. Do not be alarmed though as one important point that often gets overlooked is the fact that as your business contributions increases, your national insurance contributions decrease.
Learn more at the Culloden
If you would like to learn more about the auto enrolment with pensions for businesses in Northern Ireland join us in the Culloden Hotel on the 2nd February 2016, where Iain Ferguson will be offering practical advice and support for your business. You will come away with insight into how the process works and seven key steps needed to implement it.