I know, it’s not the most glamorous or exciting topic, but it’s one I’ve been finding out about this week, as the implications for your business getting it wrong, or not getting it done on time, are serious.
And if you leave it to the last few months you’re likely to find your options are limited.
So, I’ve been talking to a leading advisor on auto-enrolment, Rich Cooper from Jamieson Christie Wealth Management, to find out what we all need to know.
Most business I talk to just don’t have it on their radar yet, as it’s “a long way in the future” but I was surprised to hear that with staging dates for small companies starting in 2014, just how long it can take to set your scheme up properly.
And the penalties for getting it wrong, or missing the deadlines are scary.
These are the top 12 tips and facts I took away from meeting with Rich:
1) If you have over 50 people on your payroll, your staging date could be as early as April 2014 – not long at all.
You can find out your staging date by keying your PAYE reference into this tool on the pensions regulators website: http://www.thepensionsregulator.gov.uk/employers/tools/staging-date.aspx (link is external)
2) The Pensions Regulator has the power to issue a fixed penalty of £400 along with an escalating penalty based on a daily rate, between £50 and £10,000 per day depending on how many employees you have.
3)The average lead time to set up a scheme is 12-18 months prior to the staging date even if it is a small to medium size company.
4) NEST, the potential default scheme for many employers recommend that you start to look to start to organise your scheme 12 months before your staging date –even if you are a small employer.
5) Many providers are being very selective to which schemes they will consider and some will not consider any employer with less than 6 months to their staging date, and some have indicated they will soon be closing their doors to new schemes due to lack of capacity.
6) The number of employees opting out is actually very small – less than 10%. Have you considered the financial impact of this on your business over the next 5 years?
7) The regulations are complex, and many business owners have underestimated the time and resource needed to meet their requirements.
8) The regulatory responsibility for the selection, set up and maintenance of any scheme falls firmly on the shoulders of the business owner.
9) Some business owners have assumed they can use their existing pension schemes but then found that they’re not compatible with Auto Enrolment.
10) The Pension regulator is aggressively opening investigations into schemes that have already been set up, so it’s crucial you set your scheme up properly to avoid this happening to you.
11) 83 employers completed their registration process between October 2012 and March 2013 and the Pension Regulator has already opened 89 investigations into non-compliance by these employers.
So, my advice would be to:
- Find out your staging date – soon
- Get some advice, either from your advisor, or give Rich at Jamieson Christie a call on 01676 532210 who will be happy to have a chat.
Jamieson Christie Wealth Management Limited are Chartered Financial Planners and Employee Benefit Consultants.
Amongst our team we have advisers with the prestigious Chartered Financial Planner and designated auto-enrolment qualifications along with a wealth of knowledge and experience in both setting up and administering auto-enrolment pension schemes.
We are able to help our clients to understand their current situation, their regulatory requirements and the options available to them. We can recommend, implement and maintain a scheme from a tailored completely bespoke arrangement to an ‘off the shelf’ simple solution.