I’m sure by now that you have heard about Pension Auto Enrolment? But do you really understand what it means for you and your business? Personally I think there are a lot of scare stories out there, but one thing is true Pension Auto Enrolment is coming, and coming very soon! For some people it's coming this year!
One of Hayward Wright's clients - a company with only one employee - has to have an Auto Enrolment Pension Scheme in place and active by the 1st June 2015. Yes, that’s less than 4 months away. However, don't panic if your company is this small, in this case it's because of his PAYE reference number, but more on that in a second...
Lets first take a look at a bit of background to Pension Auto Enrolment
The simple fact is, everyone is living longer but unfortunately saving less for their retirement. The Government just had to step in and do something about it; the current state pension system would just not cope in years to come.
In the Pensions Act 2008, provision was made to encourage greater private saving. This included changes to workplace pensions that came into effect in 2012 with the largest employers having to implement Auto Enrolment.
Now some 3 years on from when the largest employers had to join the scheme there are 1000’s of small businesses bearing down on their enrolment date. Those businesses with between 30 and 49 employees have to have a scheme setup and running between August and October 2015. And remember me mentioning the one client with a single employee has to be ready from June this year? That’s because there is a small test batch of companies with less than 30 employees in June 2015, is your business one of these guinea pigs?
So what does it all really mean for business owners?
Firstly, of course the employer must have a scheme in place and has to bear the cost of administering the scheme. Of course financial advisors, accountants, and payroll bureaus can assist here but there will be a cost involved. The employer must also contribute to their employees’ pension pot, contributions start at 1% of salary rising to 3% in 2018.
There is a lot of information about Auto Enrolment Pension out there almost to much in my opinion. It is my belief that the right way to tackle this is to first find out when your business must have a scheme in place. Once you know your date, take some professional advice to work out a plan for how you can make Auto Enrolment work for you, after all fail to plan is a plan to fail!
You can find when your business must have a scheme in place out by visiting at the Pension Regulator's website.
For more information from us, we recently ran a seminar on auto enrolment, the video of which can be found here.
If you would like some expert advice from the team here at Hayward Wright, please don't hesitate to get in touch