Auto Enrolment

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In the first 3 months of 2016, according to the Pension Regulator’s figures, more than 100,000 small and micro employers are due to hit their Auto Enrolment staging date. A significant number of these have still not made provision for this legislative requirement. Employers cannot afford to be complacent as there is a lot to put in place; finding a scheme, assessing their workforce and ensuring the payroll software can provide the relevant information, to give a few examples. If you employ at least one person you are an employer and you have certain legal duties.

All employers must have a qualifying scheme in place or risk being penalised. In the quarter to September 2015, tPR issued no fewer than 469 compliance notices – an increase of 400% over the previous quarter. Most notices are issued to employers who have failed to complete their declaration of compliance on time. This is the registration document, to be completed after the staging date, which shows what the employer has done to comply with the legislation.

A qualifying scheme may still be required, even if the employer has no Eligible Jobholders to enrol in it. An Eligible Jobholder is an employee between the ages of 22 and State Pension Age, who is earning at the rate of £10,000 per annum.

There are a few exceptions to this situation, the main one being a Limited Company with only 1 Director working within the business. If the business owner is the sole director they do not need to set up a scheme. However they do still need to take action, as they need to inform the Pension Regulator of this by completing an online form at: https://automation.thepensionsregulator.gov.uk/notanemployer

Inevitably, amendments to the original plans have already been made. In his recent Autumn Statement the Chancellor, George Osborne, announced:

“To simplify the administration of automatic enrolment for the smallest employers in particular, the next two phases of minimum contribution rate increases will be aligned to the tax years. Instead of increases taking place in October, they will now occur in April of the following year”.

It looks like there is still some fine tuning to come!

Crab Insight December 2015

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