What is a workplace pension?

In recent months – or years, even – there’s been a lot of talk about workplace pension schemes. The new rules, which – for SMEs – will begin to come into effect from August of this year, will require all employers (who employ at least one member of staff) to set up and contribute toward a pension scheme for each of their employees. The employees themselves will also contribute to the scheme, via deductions from their pay (which the employer will be responsible for implementing), along with the government, who will contribute via tax relief.

Less than 30 of you?

Fortunately, SMEs that employ less than 30 people have until January – April 2016, to get their houses in order, so to speak. The timetable can be found here.

So when, exactly, during that four month timeframe will the dreaded day of reckoning occur? Well, this will depend entirely on your PAYE reference number so we’d advise checking now to find out how lucky you are. This can be done here.

Can employees opt out?

Yes! All employees have the right to opt out of this scheme. However, employers have been explicitly forbidden to advise their employees against enrolling and, as hinted at by the name Automatic Enrolment, the default (and mandatory) course of action for employers is to enrol all eligible employees into the scheme. It is of course right to insist that employers do not attempt to sway employees one way or the other. Indeed, the decision of whether or not to remain opted-in should come from the employee and the employee alone. It is however important that employees are made aware of the fact that they do have a choice.

Is there an easier way?

As quoted earlier, the government have recommended allowing up to 12 months to prepare for auto-enrolment. Evidently, they’ve envisioned the process as potentially longwinded. Employers are tasked with identifying who’s eligible, picking out a pension provider and reorganising the payroll to cater for the changes. This will likely mean spending time and money seeking out advice from advisers. Ideally, the entire process would be automated, with employees simply opting-in or out, as desired, before handing the calculations and transfers over to a bit of software, thus leaving business owners free to focus on other matters (such as running the business!). Indeed, the payroll process – even without all this auto-enrolment crap – can be tricky and time consuming. This is why we’re so excited about our new product. Follow us on Twitter @EasyEnrol for more info.

Tom Hart

Posted on Tuesday 1 Dec, 2015, 4 years ago

January 16, 2018

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