- Set up a workplace pension scheme that meets the new rules.
- Automatically enrol workers who meet the age & earnings criteria.
- Make a minimum contribution for all eligible workers.
- Enrol other workers if they ask to join the scheme.
Find out the required staging date for your business via http://www.thepensionsregulator.gov.uk/
Choose a pension scheme that suits the business’s needs:
Either approach an Independent Financial Adviser for advice, or small businesses can use NEST (National Employment Savings Trust) or NOW (Now Pensions). Both NEST and NOW offer all you need for auto-enrolment, are easy to set up and abide by the minimum requirement rules.
Key action points
Assess each employee: If earning over £10,000 and over age of 22 they must go into auto-enrolment. Other employees can choose to opt in if they want.
Each employee must be given a letter about why they have or have not been enrolled and how to opt in or out.
If they opt out within the first month, then that month’s contribution will be refunded to them in the next pay run, if they opt out after this date the contribution will sit in the fund until retirement age or transfer to another scheme.
The minimum contribution rate is currently 1% for employees and 1% for employers – though only on ‘qualifying earnings’ which for the 17/18 tax year is any earnings over £490 per month. ( 2016/17 amount was £485 per month )
From 6th April 2018 the minimum total contribution is 5% – where the employer must pay at least 2% (so employees will have to pay 3%).
From 6th April 2019 onwards the minimum total contribution will be 8% – where the employer must pay at least 3% (so employee would have to pay 5%).
Employee contributions are eligible for tax relief, this means they don’t pay tax on the contributions they make to the pensions, making this a tax efficient form of savings.
If you want help with your payroll and auto-enrolment just give us a call 01273 739592