podcast-daymond-john

An Introduction To Auto Enrolment For Small Businesses

with

An Introduction To Auto Enrolment For Small Businesses

with
Share Button

If you manage a small business then it is important that you familiarise yourself with the automatic enrolment process for workplace pensions. Introduced by the government as part of the Pensions Act in 2008, ‘Auto Enrolment’ is a provision that requires all employers to offer their employees workplace pension schemes and to actively enrol all eligible workers. These pension reforms were introduced because many workers did not have access to sufficient saving schemes in order to prepare for their retirement. Therefore, if you manage a small business and have been struggling to get to grips with the process of automatic enrolment, then here is a quick and easy guide which will help ensure that both you and your employees have the proper provisions in place;

Identify all eligible workers

Firstly, you will need to ascertain all the workers employed by your small business who are eligible for automatic enrolment into a workplace pension scheme. According to government guidelines, eligible jobholders for auto enrolment are individuals aged between 22 and the State Pension Age, and whose pay packet is over the earnings threshold (which currently stands at £10,000 per annum).

Eligible workers for automatic enrolment are also individuals who are legally eligible to work within the United Kingdom and who have a contract of employment with an employer. As a result, if you have self-employed contractors who work for your company then you will not have to factor them into your company’s auto enrolment processes.

Investigate staging date deadlines

Once you have identified which of your workers qualify for auto enrolment, you will need to investigate your company’s specific staging date deadline for enrolling all of your staff into workplace pension schemes. Although the automatic enrolment process began in 2015, depending upon the tax status of your business you may have until October 2018 to enrol all of your staff. Fortunately, you can efficiently calculate your staging date deadline by using online auto enrolment planner tools. As Smart Pension highlights; the only things you need to calculate your staging date deadline is a record of how many workers your company employed on 1st April 2012 and your PAYE reference number. 

Calculate your company’s minimum contribution requirements

By automatically enrolling your employees into a workplace pension scheme, you will be required to deduct any contributions that the employees in question are required to pay from their wages and then contribute funds into the workplace pension scheme on their behalf.

As such, it is important for the financial stability of your small business that you are aware of the minimum contribution requirements that you will be expected to pay. These minimum requirements will fluctuated depending upon the staging date deadline that you have received from the Pensions Regulator. As a rule, the auto enrolment minimum contribution requirements will initially be 2% (of which 1% must be paid by you, the employer) and they will increase to a total of 8% (of which at least 3% must be paid by you, the employer).You can find a more detailed list of the minimum contribution requirements for employers listed on the Now Pensions website. Should you have any further inquiries about the auto enrolment process, you can find the full terms and conditions, as well as targeted budgeting advice, via the official Pensions Regulator website.

Andy McGowan
Latest posts by Andy McGowan (see all)