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Don't ignore auto enrolment - the consequences of doing so could be hugePensions auto enrolment- Brand New Seminar - VAT Visits and Investigations

Auto enrolment reforms began last October and over the next 4 years this new legal requirement will result in millions of workers being automatically enrolled into a pension scheme for the first time. Implementation dates are staggered over five and a half years and are determined by the organisation’s size. You can find your organisation's implementation date here.

Prepare Early

Even if your implementation date seems some time away – it is essential that you prepare for your company’s scheme in good time.

Recently, we spoke with Howard Northover of E.S. Walton and he made it clear that early preparation is vital when it comes to auto enrolment. He said that when companies see that their implementation date is twelve months or more away, they may be tempted to put it to one side. However it is absolutely essential that you plan thoroughly for the changes. Howard advised that depending on the size of the organisation, planning should start at least twelve months in advance of the staging date and ideally it should be more like eighteen months.

Who will be automatically enrolled?

Once you know your staging date, you need to know exactly what you are required to do. A question that is commonly asked is ‘Do all employees need to be auto enrolled?’

Under the new law, for the first time, employers are required to automatically enrol their employees on a qualifying pension scheme. Employees must be automatically enrolled if they fit the following criteria. The employee…

  • Is over 22 years old
  • Is under state pension age
  • Earns more than £9,440 per year
  • Works or mostly works in the UK
  • Is not already in a qualifying pension scheme

What if employees don’t want to be automatically enrolled?

Employees that don’t meet the criteria for auto enrolment can choose to 'opt in' to become a member of an auto enrolment scheme. As well as the option to opt in, employees that are auto-enrolled also have the option to ‘opt out’.

For employees it is important to understand what a workplace pension is, how it will work for them and importantly, how they can benefit from them. They need to know their rights and options so that they can make the correct decisions.

But what about the employer?

Employers need to understand how auto enrolment will affect the company. They must also be aware of their role when it comes to communicating with staff. They should provide staff with the information and make them aware that they can opt out – but must be careful not to encourage workers to opt out as this could lead to penalties. There is a fine line here and employers must be absolutely sure they are doing things correctly.

Penalties can be severe

Employers can receive substantial penalties for failing to engage with the reforms as well as failure to enrol or pay contributions on time. Employers must also be aware when hiring staff, they cannot discriminate between those that are and are not eligible to be automatically enrolled. Penalties escalate depending upon the size of the organisation but as an example, an organisation that has between 50 and 249 employees can receive penalties of £2,500 per day.

How can UK Training help you prepare?

UK Training is presenting a series of online seminars which will help you get to grips with what you and your organisation need to do. For details of the first live online seminar please go to this webpage.

Stephen Smith
Managing Director
UK Training (Worldwide) Limited

 


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