Pensions Enrolment – Yet Another Headache For Employers
As an employer in the 21st century you have to comply with a whole raft of laws that cover all sorts of different areas - and which were not required thirty or forty years ago - concerning things such as fire safety in the workplace, employee pensions, and so on. Furthermore, many of these laws can get very complicated, and when you run a business they can take up a lot of your time that you should be spending on developing your business, making sales, and serving your customers.
In addition to that, unless you have training in many of these areas, they can be difficult to understand. For example, take fire safety. You are required to carry out a fire safety assessment of your premises. You may have trained as a lawyer, you might run a furniture store, perhaps you run a gym, and you are probably very good at whatever it is that you do. However, what do you know about fire safety? It’s a fairly safe bet that the answer is “very little”.
The same applies to pensions. Under the Pensions Act of 2008 you are required to set up a proper workplace pension scheme and automatically enrol all eligible employees into it. As a furniture retailer, what do you know about pensions for employees? Where do you even start?
This area is one that we can help you with at PayCheck with our auto enrolment pensions administration service. The first thing is to assess your employees in order to decide who is eligible and who is not. An eligible worker is someone who is over 22 and under state pension age and earns over £10,000 p.a. Non-eligible workers are aged 16 - 21 or state pension age to 74 and earning more than £10,000, or aged 16 – 74 and earning less than £10,000 but more than £6,136 p.a. Already you can see that there is something that you need to keep an eye on, because a salary increase or birthday can mean that a non-eligible worker immediately becomes eligible and must be enrolled.
Then you have entitled workers who are 16 – 74 and earning less than £6,136 p.a. However, both non-eligible workers and entitled workers can ask to join the scheme and if they do so, you must enrol them. However, if an entitled worker joins the pension scheme, you do not have to pay a contribution.
Then there is the matter of qualifying earnings which include salary, wages, commissions, bonuses, overtime, statutory sick pay, statutory maternity pay, ordinary or additional statutory paternity pay, and statutory adoption pay. When you have taken all that into account you then have to take the total of the employee’s annual pay and divide it by 12 if paid monthly, or by 13 if paid four-weekly, to obtain the qualifying earnings for the period and then calculate how much you have to contribute to the pension pot as the employer and how much to deduct from the employee and pay into it. Oh, and both you and the employee can contribute more if you choose to do so.
Furthermore, employees can choose to opt out if they so wish. However, if they do that, every three years you have to automatically re-enrol them and inform the Pensions Regulator that you have done so. But note that the employee does not need to be automatically re-enrolled if he/she opted out in the 12 months before the re-enrolment date.
There is a lot more to this as well, but suffice it to ask whether you would like to deal with it all by yourself or whether you would prefer to use our auto enrolment pensions administration service while you get on with growing your business.