If your business employs staff and you have not yet had to provide them with a pension, then the chances are you must do so this year. 2017 will see the majority of smaller businesses reaching their “staging date” for auto enrolment.
First, don’t panic. But don’t ignore it either. You should know your staging date, and if you don’t then you can check it here: http://www.thepensionsregulator.gov.uk/employers/staging-date.aspx. You must be set up and ready by this date, which means you should get started now. There are criminal penalties and hefty fines for non-compliance so head-in-the-sand is not an option. Nominate someone in your business to head up the charge - let’s be honest, probably you, so roll your sleeves up and get on with it.
Second, get some advice. If you have one, talk to your independent financial adviser. Many IFAs are not interested in taking on the tiddlers – it’s a lot of work for not much reward, and for the smallest businesses many of the pension fund options are not really viable or even available to you. The Pensions Regulator has a lot of useful information for employers, so if you do not have a financial adviser, this will be your best source of impartial advice (link: http://www.thepensionsregulator.gov.uk). Either way, for the very smallest of teams, catch-all providers like NEST and The People’s Pension may be your only choice.
Next, invest some time in reading the small print. There will be costs involved to you and your staff whichever pension you choose. There will be some upfront set-up costs and you and your enrolled workers will make contributions every month. Fund management fees will be deducted from the funds. Costs differ widely between pension providers, so make sure you understand what you are signing up for before you sign up.
Now stop procrastinating and sign up!
This is when the fun really starts. You (or your nominee) will need to assess your workforce and communicate with them according to strict rules, and for all eligible workers you must enroll them in the pension from the staging date, but give them the (uninfluenced) option to opt out, and opt back in again when they wish. The whole cycle repeats itself every three years, and you must declare yourself compliant promptly, or there is a penalty.
If you think the fun stops there, there will be an ongoing burden to assess your workforce every payroll period for eligibility, manage opt-ins and opt-outs, communicate appropriately, make the correct deductions and report and remit contributions to the pension funds. If you run your own payroll this will be down to you. Make sure the software you use can handle these extra tasks, and get training if you need it. If someone else does your payroll for you, do not assume that they will automatically pick up this extra work. Talk to them. Involve them in your decisions from the start and ask them what they will do for you and what they will charge you to do it. It’s a lot easier if the software they use will work with your pension provider. The chances are they have already done this for many clients and will have it down to a fine art.
It may seem daunting, but there is help out there – from all sorts of places. Your accountant or your payroll provider may be willing to help you if you do not have the luxury of a dedicated HR team. The chances are they are not authorised to give pensions advice, but they will be able to help you find the information you need to make the choices yourself, and they could support you with much of the admin burden. Just ask. Today. What are you waiting for?