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Employers – If you only read one thing in the next year, let it be this!

OK, we know we keep banging on about “auto-enrolment”.  But the message here is really important.

The story so far…

  • Every employer must, by a fixed “staging date”, enrol all their eligible employees into a pension scheme which meets specified criteria.

[Some companies which have only directors, and no employees, may be excluded from the requirements, depending on detailed circumstances.]

  • The earliest staging date (for large payrolls) was 1 October 2012, with most employers falling into the period from June 2015 through to January 2018.
  • Employers must register their schemes with The Pensions Regulator on time, or face financial penalties, escalating to a daily charge of up to £500 per day for a work force of up to 49 employees (more for larger employers).
  • A number of choices will have to be made in reviewing or setting up a scheme: choosing a pension provider; selecting between alternative levels of contribution (understanding this, and getting it right, may make a huge difference to the cost to you for years to come); setting up administrative systems and integrating them into your payroll process.  Employees will need to make decisions about the funds they want to use.  All of this will take time, and (crucially) will almost certainly require good advice from pension providers and/or intermediaries.

 Now here’s the thing…

Figures published recently suggest that the maximum number of new schemes the UK pensions industry can realistically cope with is somewhere between 12,000 and 15,000 per month.  Against that backdrop, from 2016 through to 2018, the number of employers required to register under auto-enrolment (or face penalties) will vary between 40,000 and 120,000 per month.

Very clearly, many employers who intend to set up their auto-enrolment schemes in the few months running up to their staging dates will, in those peak years, find they cannot get proper   professional advice, and may simply not be able to register a scheme at all in time to meet their deadlines.

The message is stark.  If you want to be sure you can get the advice you need, and avoid penalties, start the process now.  You can deal with much of the preparation  in advance, without necessarily starting to run your scheme until you reach your staging date.

 We cannot help you select a pension scheme, but we know people who can.  If you want to talk through how all this may affect you, please call us, sooner rather than later.

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