Our experience shows that the earlier planning starts, the better prepared an employer is by the time their staging date arrives. You might decide to bring forward your staging date if you are ready.
At the point of staging employers need to have made all the necessary decisions, including which pension provider to use and whether any additional functionality from the payroll software is required.
It is worth contacting any existing pension scheme providers at the planning stage as it can take many weeks to identify if the scheme can be used as a workplace pension scheme.
How much will it cost the company?
When working out the budget for pension contributions include any additional fees incurred regarding advice, payroll and pension provider. In order to work out how much it will cost in pension contributions, you need to sort your workforce into the three categories of worker – Eligible Jobholder, Non-Eligible Jobholder and Entitled Worker.
You must enrol Eligible Jobholders into a workplace pension scheme and pay a contribution for them; Non-Eligible Jobholders can opt into the workplace pension scheme and you must pay a contribution for them. Entitled Workers can opt into a pension scheme, but you are not obliged to pay a pension contribution for them.
Would your budget allow you to meet all contributions? When are pay reviews due? Would you consider using Salary Exchange for some, or all, of the workforce?
What does a workplace pension scheme mean?
As auto enrolment legislation means a pension contribution is to be paid for, perhaps, the whole workforce, what does this mean to you? Do you want to simply comply with the legislation, or do you see a pension scheme as an important employee benefit and perhaps a means of attracting and retaining staff?
Who will undertake the employer duties?
Much of the work around auto enrolment generates from payroll. However, depending on what software you use, and what pension provider you have for your workplace pension scheme, this could be the difference between an almost fully automated arrangement and a very self-service arrangement.
There are key dates to meet with auto enrolment, including the assessment of the workforce every time a payroll is run. Any changes in the workforce must be communicated to the relevant worker using a set of statutory communications, and a record kept of who did what, when and how.
The Pensions Regulator has your staging date, and we know they check the registration process. They will contact you if you miss this and you could expect to receive a Notice of Non Compliance in the first instance. Continued avoidance of the legislation could lead to fines.
Don’t stick your head in the sand. When you receive notification of your staging date, make a plan.
Ricky Clark is a pension specialist with Henderson Loggie.