When you start your own business there are so many things to remember but one of the most important ones is that as soon as you start employing staff, even if it is just one person, you must place them into a workplace pension if they fit the criteria.
Automatic enrollment came into being under the Pensions Act 2008, whereby all employers in the UK must place certain staff into a workplace pension scheme and contribute to it. The Pension Regulator has to ensure all employers comply with the law so regardless of what type of business you operate, from accountancy to taxis and florists to vets, you must ensure you comply with the 2008 Act from the first day you become an employer. This date is known as your duties start date and it is imperative you understand your legal obligations and prepare in advance ready for this. You still have legal duties even if you believe you won’t need to enter your staff into a pension scheme.
Firstly, you’ll need to select a pension scheme that is set up for automatic enrolment. This can be time-consuming so start looking as soon as possible and if you are unsure, speak with a pension expert.
The next step is to find out who to enter into a workplace pension scheme on your duties start date because there are exceptions. This is dependent on the amount each employee earns and their age and this process is known as assessing your staff. This information is required for your declaration of compliance. Generally speaking, anyone earning £833 or less per month doesn’t have to be entered into a scheme. And for employees earning more than £833 per month, only those aged from 22 to the state pension age must be enrolled.
There is an option called postponement where you can delay assessing your staff for up to three months, but you’ll have to notify your staff in writing about this and bear in mind that it doesn’t change your duties start date.
Once you’ve worked out who needs to be put into the pension scheme you need to submit the relevant details to the pension scheme provider. Then you need to work out how much you and your staff need to contribute to the schemes. This may vary depending on the pension scheme, but the minimum contribution is 3% of salary from the employer and 5% from the employee; payroll software will help you with this.
Within six weeks of completing this, you need to write to your staff notifying them that you have enrolled them and what it means for them, although your pension provider may do this on your behalf.
Finally, within five months of your duties start date, you are legally obliged to declare your compliance to the Pension Regulator but remember you will always have ongoing duties towards your employees.
The Pensions Regulator is there to help you meet your duties as an employer, but it is well worth speaking with a business adviser for support.
For more information about your duties as an employer towards automatic enrollment please visit: https://www.thepensionsregulator.gov.uk/en/employers/setting-up-a-business-what-to-do-for-automatic-enrolment