As a result of Automatic Enrolment, millions of people now have a workplace pension. Find out how this affects your business.
Under the Pensions Act 2008, every employer in the UK must put certain staff into a pension scheme and contribute towards it. Employers will have to provide a workplace pension for eligible staff by 2018. This is called ‘automatic enrolment’.
If you employ at least one person you are an employer and you have certain legal duties. It’s important that you understand what to do and by when, so you can meet your automatic enrolment duties.
Find out when you’ll need to start enrolling people. This is known as your ‘staging date’.
Check your staging date here.
Check you’re an employer
You’re usually an employer if you deduct tax and National Insurance contributions from an employee’s wages.
Automatic enrolment duties do not apply when a company or individual are not considered an employer. For example, you may no longer employ any staff, you have ceased trading, or you’re the director of a company with no other employees.
Check you’re an employer here.
Employees who qualify for a workplace pension
You must enrol and make an employer’s contribution for all staff who:
are aged between 22 and the State Pension age,
earn at least £10,000 a year (2017/18),
work in the UK.
How to set up a pension scheme
You must set up a workplace pension scheme, if you don’t already offer one.
Use The Pensions Regulator’s Duties Checker to find out what you need to do and when you need to do it.
Check your duties here.
You should choose an appropriate scheme that has been independently reviewed or is regulated by the Financial Conduct Authority.
How much you must pay
Once you have chosen your pension scheme and worked out which staff must be put in, you’ll need to pay money into your pension scheme every time you run your payroll.
You must pay at least 1% of your employee’s ‘qualifying earnings’ into your workplace pension.
Having the right payroll software can help you manage your automatic enrolment duties, as it can automate many of the tasks which will need to be done every pay cycle. It even can calculate how much to contribute each pay period and then ensure that the correct tax relief is calculated.
If you are not sure what are your responsibilities or how to enrol your staff into a workplace pension, talk to our accountant.
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