Time is starting to run out for many small companies who need to get their auto enrolment sorted out, so I’ve been talking to Mr Auto Enrolment, Phillip Bray from Investment Sense this week about the problems many companies are facing.
Auto enrolment is becoming a real problem for 3 reasons:
1) It takes at least 12 months to get ready and companies aren’t engaging yet
2) There aren’t enough pensions advisors to deal with the number of companies
3) Both pension providers and advisors are being really picky who they take on
Pension providers probably won’t take you on if you have less than 6 months to go until your staging date, or if the total contributions are below the minimum they will accept. If you can get a pension provider your employees will have access to a wider range of funds, the fees may be less expensive than the Trust providers.
The Super Trust providers like NEST and NOW may be more willing to take on your scheme late in the day, indeed Nest have a statutory obligation to do so, but they tend to offer less investment choice.
Your staging date is the date by which your scheme MUST be set up and working.
No. of employees
Staging date
90-159
May 14
62-89
July 14
59-61
Aug 14 – Nov 14
58
Jan 15
54-57
March 15
50-53
April 15
Less than 30
From June 15 to April 17– depending on your PAYE reference
40-49
Aug 15
30-39
Oct 15
These dates might seem like ages away –but they’re not! Especially with a limited supply of advice and pension schemes.
If your staging date is within the next 6 months this is a really useful list (link is external) of things you should have done by now.
You can find out your staging date here (link is external), you’ll just need your PAYE reference.
Now obviously I’m not a pension advisor, I’m just coming at this from the point of view of a potential risk and cost to your business, and you need to take proper advice about getting your scheme set up.
Penalties
You may remember from my first blog about this back in October, there are heavy fines for not being ready, and the government have already taken action against hundreds of companies. If you employ between 5 and 49 staff this will cost you £500 a DAY!
So the advice is – get advice early, get your pension scheme set up early. See, simple!