Auto enrolment planning: As the old saying goes, those who fail to prepare, prepare to fail. For many employers, particularly SMEs who are less likely to operate workplace pensions schemes, there’s a lot to do to be ready for auto enrolment. Here are the 6 key points to understand.
1. Understand your staging date
Firstly you need to calculate your staging date, many companies have already enrolled their employees and for all other companies the clock is ticking. There are potentially crippling penalties for missing the deadline so it pays to start preparing early.
2. Understand the meaning of eligible workers
Eligible workers are any workers who meet the qualifying criteria. This includes staff on zero-hours contracts and part-time workers. In addition to undertaking an initial assessment of all staff, there will need to be monitoring systems in place to ensure that you’re ready to act on any changes which turn non-qualifying staff into qualifying staff – someone having their 22nd birthday for example.
3. Understand the numbers
In addition to budgeting for contributions for all eligible workers, you also need to budget for contributions for non-eligible workers. These are workers who are not automatically enrolled but who can request to join the pension scheme. If they do you are required to pay contributions for them. Make sure you understand what counts as pensionable pay and decide whether you are going to support salary sacrifice.
4. Understand your scheme(s)
Check that any scheme you use is compliant with current legislation. This holds true for employers with existing schemes as well as those starting from scratch. Decide whether you wish to use a single scheme for all staff or multiple schemes. If you are considering postponing auto enrolment, remember that you still need to have the scheme and enrolment arrangements in place in time for your designated staging date.
5. Understand your own systems
If you undertake payroll in house then you will need to ensure that your own systems are robust enough to cope with the new requirements. If you outsource payroll then you will need to check that your partner company is ready to implement the changes on your behalf. If you are dealing with a specialist payroll provider then they almost certainly will have their own systems ready for the change but there may be additional steps required before they implement them on your account.
6. Understand the communications requirements
Some communication is mandatory, you may wish to undertake extra to save your payroll/HR staff dealing with questions later.