Do You Know When Your Staging Date is?
You may have read about this or seen publicity from the Government in the press and media and thought:
- ‘That isn’t going to affect me’; or
- ‘I’ll worry about it nearer the time’; or
- ‘I already have a pension scheme in place – that will be enough’.
If so, you might live to regret that decision!
The Facts and Figures …
Pensions Automatic Enrolment is now with us.
So far it has mainly been larger firms that have reached their ‘staging date’ but smaller businesses should now be planning ahead for this massive change in the provision of pensions for the vast majority of the UK’s workforce.
The statistics are alarming – the Government estimates that over 1.3 million businesses will be affected. During 2014/15 there was an average of around 3,000 medium sized businesses with 50 to 249 staff reaching their staging date each month. However, during 2015/16 that has increased to almost 13,000 a month and in 2016/17 there will be an average of over 50,000 small and micro employers with less than 50 staff reaching their staging date each month! The following chart highlights the impending situation:
There are penalties, including daily fines, which can be levied by the Pensions Regulator on employers that do not comply with their Auto Enrolment obligations.
Anecdotal evidence from those firms that have already reached their staging date suggests that it is unwise to underestimate the time input required and the costs of setting up fully compliant Auto Enrolment arrangements.
Limited Capacity in the Pensions Market
The other major factor that has become apparent is that there is already limited capacity in the pensions market – both providers and advisers – who are being very ‘choosy’ as to which cases they are prepared to take on. Some have opted out of Auto Enrolment altogether, including several of the big insurance companies, as they do not see this as profitable business. The massive ‘spike’ in smaller employers reaching their staging dates in 2016/17 will inevitably mean many will miss out if they leave their action plans until the last minute.
The advice therefore must be to look at this sooner rather than later and, if necessary, bring forward your staging date. This will ensure you are able to secure the most appropriate arrangements for your business whilst there is still capacity in the market (this would not commit you to making pension contributions any earlier than your ‘normal’ staging date).
If you are certain that your current company pension scheme will comply with the Government’s requirements, that’s great, but if not, the good news is that we are here to help.
Now is the time to start the process to find the right pensions solution for your business.
Our Preferred Auto Enrolment Solution
We have been working with Punter Southall Aspire (PSA) to help some of our larger clients through the Auto Enrolment maze. We are pleased to say that PSA are now in a position where they are able to offer a cost effective Auto Enrolment Solution to small and medium sized businesses.
PSA is part of Punter Southall Group which provides actuarial advice, pensions consultancy, administration, risk and investment consultancy to over 1,000 pension schemes and employers including a number of FTSE350 companies. They have offices throughout the UK.
PSA have the expertise and resources to ensure that they guide your business towards the right Auto Enrolment solution. If you have an existing pension scheme, they can help tailor your current arrangements so that they comply with the new rules. If you don’t already have a company pension scheme, they can help you set one up.
Whilst we are able to introduce clients to PSA, pensions legislation means that all of the Auto Enrolment compliance and implementation work needs to be carried out by them.
PSA offer a range of Auto Enrolment solutions to suit your business needs and budget. For example, the Xpress Assisted service, specifically aimed at the smaller employer, starts at just £425 + VAT.
The other key ingredient of a successful Auto Enrolment implementation strategy is to ensure you have adequate payroll administration support. This will be fundamental to providing the initial details in the required format to your Auto Enrolment provider and the subsequent administration of pension contribution deductions from staff wages and salaries.
You will need to ensure your systems are reviewed and modified as necessary to comply with the new reporting requirements.
Again, just so you are aware, we have our own in-house payroll bureau that utilises the most up to date software that fully complies with the requirements of most of the Auto Enrolment providers. PSA Auto Enrolment services have been designed to be fully compatible with our own payroll systems. Consequently, PSA’s charges for the Xpress Assisted service are reduced, starting at just £150 + VAT, if you also use our payroll bureau.
You can find out more about our payroll administration services here.
Remember – the clock is ticking – Auto Enrolment compliance is compulsory – please take action now and avoid the wrath of the Regulator!