Your Business With James Caan 2017 - 276
into the pot
As an employer, you must provide a workplace
pension or face hefty fines. Here's all you need to know
WORDS: TRISH LESSLIE | PHOTOGRAPHY: SHUTTERSTOCK
egardless of the size or turnover
of your business, if you employ
staff you must provide a workplace
pension. Under the Pensions Act 2008,
every employer in the UK must put
certain staff into a pension scheme
and contribute towards it.
Automatic enrolment, as it's known,
applies even if you employ only one
person. Failure to comply can result in
hefty fines - an initial penalty of £400,
followed by daily charges of between
£50 and £2,500, depending on the size
of your business. You could even face
prosecution for non-compliance, so it
pays to ensure you know exactly what
your legal duties are.
Auto-enrolment initially only applied
to companies with 250 or more staff,
but has now been rolled out to include
all SMEs. If you're an employer, you
should have received a letter from the
Pensions Regulator advising you of
your staging date (date of compliance)
at least a year in advance. However, if
you're uncertain of your staging date,
you can look it up using the calculator
at thepensionsregulator.gov.uk, using
your PAYE reference.
You can also calculate your pension
scheme contributions on this site.
These currently start at 1%, but as an
employer you'll need to contribute a
minimum of 3% from October 2018
for each eligible employee.
If you already have a pension in
place, make sure it's suitable for
auto-enrolment. A business adviser
can help with this. It's also a good idea
to invest in payroll software that's
compatible with auto-enrolment.
WHO YOU NEED TO ENROL
You must enrol all staff aged between
22 and the state pension age if they
earn more than £10,000 a year by
your staging date. If you don't have
any such employees, you don't have
to set up a scheme but you do need
to let the Pensions Regulator know.
For staff who earn less than £486
a month, you'll need to provide a
pension scheme but not contribute.
For staff earning over £486 a
month, you will have to contribute.
WHAT STAFF NEED TO KNOW
Once all your members of staff have
been automatically enrolled, you
will need to write to each one
informing them of your pension
scheme and their right to opt
out. You can find templates for
this on nestpensions.org.uk,
the website of the National
Employment Savings Trust,
a workplace pension scheme
for auto-enrolment created
by the government.
Employees have only a month
to opt out after enrolment and be
fully refunded any contributions.
After this, whether or not they're
entitled to a refund depends on
the rules of the pension provider.
The pension scheme gives the
opt-out notice to the member of staff
to avoid any undue influence by the
employer and it's illegal to try to
encourage your employees to opt
out of your pension scheme.
If a member of staff does decide
to opt out, you must alert payroll to
stop taking any more contributions
from that employee's salary. Staff
who opt out can opt back in later.
BENEFITS FOR EMPLOYEES
The government tops up pension
savings with 20% tax relief, so for
every 80p your employee pays into