If businesses haven’t considered the operational impact of pension auto-enrolment, now is a very good time to start. The law requiring employers to automatically enrol workers into a work based pension scheme came into force for very large employers on October 1 2012. Other employers can work out when they will have to comply (the staging date) according to the number of employees they had on April 1 2012. The more employees an employer had on that date, the earlier the staging date.
The staging date for employers with more than 250 employees has now kicked in (February 1 2014) and it is arguable that the size of these businesses provides them with the organisational resources to cope with the complexities and bureaucratic burden that comes with the auto enrolment process.
This simply won’t be the case for many smaller businesses that will nevertheless still face a fine of up to £5,000 a day for non-compliance. Working out your business’s staging date, having a qualifying pension scheme in place and operating your payroll scheme won’t quite be enough to meet the new auto enrolment requirements.
There is an onerous administration function to be carried out every pay period which requires a system and audit trail in order to keep the pensions regulator satisfied. Employers have to assess which employees are eligible and communicate with different groups of workers at different times. The business’ payroll now needs to ensure the correct pension contribution is made for each employee every time the payroll is run. Detailed records are needed to identify those who have opted-out and those who have opted-in.
In addition to establishing new processes and maintaining new records, employers also have the responsibility of selecting a pension plan that is suitable for their workforce - something few are qualified to do. Many will opt for the Government commissioned National Employment Savings Trust scheme but this is widely expected to run out of capacity to cope as the volume of businesses hitting their staging date accelerates.
In a survey entitled ‘Automatic Enrolment One Year On’ conducted by law firm Eversheds and published last October, it was revealed that while the majority of respondents viewed auto enrolment as a positive thing, ‘the majority of employers are finding the administrative burden connected with automatic enrolment to be their greatest challenge.’
At Francis Clark, we have supported the business community with seminars on auto enrolment designed to make the responsibilities and options clear and provide a full pension auto-enrolment support package including training, where appropriate, for clients whether we run their payroll or not. We see this as an important service which lifts a massive burden of legal compliance from the shoulders of senior managers and lets them get on with running their businesses.
For further information contact Martin Atkins, partner at Francis Clark LLP. Telephone: 01752 301010 Email: email@example.com Francis Clark has offices in Exeter, Plymouth, Salisbury, Taunton, Tavistock, Torquay and Truro. Francis Clark is the winner of the 2012 British Accountancy Awards ‘Tax Award of the Year (non global firm)’, LexisNexis ‘Best Tax Practice in a regional firm’ in 2012, ‘Auditor of the Year - Mid Tier’ in the National Financial Director’s Excellence Awards 2011, and LexisNexis ‘Best General Tax Practice Award’ 2009. More information is available at www.francisclark.co.uk