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Are you pension ready?

Workplace Pension Bureau Director, Richard Pope, explains the importance of employers complying with the new company pension legislation, regardless of business size.

Workplace Pension Bureau Director, Richard Pope, explains the importance of employers complying with the new company pension legislation, regardless of business size.

British business is in the middle of a huge shake-up, as changes to the rules on pensions schemes mean that millions of workers are to be signed up to a workplace pension scheme by 2018 - most of these over the next nine months - with the onus on the business owner to get this set up and in place.

What does The Workplace Pension Bureau (WPPB) do?
The WPPB is your professional helping hand in setting up your company workplace pension. We're here to guide you through your employer duties one step at a time and offer you a service that suits your personal involvement. The WPPB has been designed to cater for the small- to medium-sized businesses in the UK; we feel that larger companies have the help and support behind them whereas small to medium sized businesses are neglected. With this in mind, the WPPB was created.

When did the workplace pension begin?
The Workplace Pension scheme started in 2012, and has now reached its final and biggest year for staging dates with the small- to medium-sized business. Each company has its own staging date - there isn't a blanket deadline to get this done by, so it's important to know when yours is.

What are the consequences of missing your staging date?
There are large penalties for missing your staging date, and for repeat offenders the threat of imprisonment. Employers have already felt the full force of the Pension Regulator; receiving hefty fines and in some cases, even prosecution - so ignoring automatic enrolment isn't an option, it's a legal requirement. Even if you employ just one member of staff this will still affect you and you must comply with legislation.

Here's everything you need to know as an employer:
The Workplace Pension Act is law
In October 2012, the government introduced the requirement for employers to enrol its staff into a workplace pension, without employees having to take any action. This system is known as automatic enrolment and has been designed to encourage a retirement savings culture in the UK. This new legislation requires all employers with one member of staff or more to automatically enrol all eligible members of their workforce into a pension scheme that meets certain minimum standards.

Not all employees are affected
All employees, aged between 22 and state pension age (currently 65) earning more than £10,000 per year, are eligible for auto enrolment and must be auto enrolled. Employees aged between 16 and 74, earning more than £5,824 but less than £10,000, are not eligible and won't be auto enrolled however they can opt in and employers will then be required to contribute. Employees who earn more than £10,000 but are under 21 or over the state pension age are not eligible and won't be auto enrolled, but they can also opt in and employers will be required to contribute. Those aged between 16 and 74 who earn less than £5,824 will not be auto enrolled either but they too can opt in, however in this scenario employers may not need to contribute.

Your staging date is unique
The process began for large employers with more than 120,000 members of staff in October 2012. By 2018, it will apply to all employers - even those that only employ one person. All employers have a staging date based on how many employees were on their largest payroll - also known as PAYE - on 1st April, 2012. A staging date is the deadline by which companies will need to have a scheme in place and be ready to enrol employees. It's assigned to the organisation's PAYE number and, in general, employers with more employees will have the earliest staging dates and the smallest organisations will have the latest staging dates. The Pensions Regulator will write to employers at least 18 months before a business' staging date, but staging dates can also be found on The Pension Regulator's website for companies that want to prepare sooner.

There are rules concerning communication with staff
It's an employer's duty to inform employees about auto enrolment and the correct communications are a pivotal part of the process. Communications should be issued well in advance of the staging date and must include how individuals will be affected by the new legislation. Advisor now: Pensions says without a considered communication plan, eligible employees risk not being made aware of their contribution obligations, whereas non-eligible and entitled employees will not know that they can join, irrespective of the fact that it won't happen automatically. It's worth noting that some pension providers handle all statutory communications to all categories of workers, while others just provide templates for employers to issue.

Employees can opt out
Employees can opt out, but those who do will be automatically enrolled every three years. This is called re-enrolment. This process is exactly the same as the initial enrolment process and employers must keep records of any employees who chose to opt out initially, as this group will be affected the most by the re-enrolment. SUBHEAD: It takes a long time to get staging-date ready NOW: Pensions recently conducted research with small and micro firms that revealed 20 per cent of small firms and 75 per cent of micro firms haven't given any thought to auto-enrolment. While companies may welcome late stages, enrolling late puts increased pressure on both the employer and the provider. It's recommended that firms begin planning at least six months in advance of their staging date, although 12 months would make for a more comfortable experience. NOW: Pensions says, "It's certainly true that auto-enrolment isn't without complexity and the sooner an employer starts planning, the easier the transition will be."

Existing pension schemes might not comply
If employers have an existing pension scheme, they need to establish if it's suitable for auto-enrolment. There have already been cases of jewellery companies with existing, long-standing pension schemes in place that have had to move to a new scheme as the current one does not comply. Check in with a pensions advisor with experience in this area, such as Workplace Pensions Bureau.

You can go to jail for not complying If you fail to comply with the auto-enrolment scheme, The Pensions Regulator will take action. Enforcement action starts with statutory notices, followed by penalty notices. Further non-compliance might result in court action. A fixed penalty notice will be issued if you don't comply with statutory notices, or if there's sufficient evidence of a breach of the law. This is fixed at £400 and payable within a specific period. If employers are late in hitting their staging date, they should take action as soon as possible to limit fines. All employers within five months of their staging date need to complete a declaration of compliance to send to The Pensions Regulator. Employers that do not complete this declaration may be fined, or in some cases imprisoned.

Richard Pope has more than 20 years in the financial services industry, working in both corporate and private practices, more specifically in business-to-business finance, and for the last three years he's been helping jewellery and fashion businesses prepare for and set up workplace pensions. He's experienced in government pension legislation and the huge impact it has on your business in costs of money, time and administration. Richard promises to help employers understand the workplace pension minefield in plain English, with zero industry jargon. Contact him at richard@wppb.co.uk, or visit www.wppb.co.uk for more details about workplace pensions.

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