The pitfalls of auto enrolment
Since April 2012, all UK employers are legally obliged to automatically enroll all eligible workers into a qualifying pension scheme by a specific deadline (‘staging date’). This is one of the most onerous challenges to face businesses in recent years and the financial penalties for breach can be severe. AEL Markhams can assist you every step of the way with regards to your auto enrolment responsibilities.
You will have a duty to assess (and continually reassess) your workforce to be able to identify which of your employees will be eligible to be automatically enrolled. For this purpose, workers have been arranged into three categories: Eligible Jobholder, Non-Eligible Jobholders and Entitled Workers. Whilst only Eligible Jobholders are required to be automatically enrolled, Non-Eligible Jobholders have a right to opt-in to an automatic enrolment pension scheme and Entitled Workers have a right to join any pension scheme. It is your responsibility as an employer to ensure that you communicate with each individual worker to ensure they are aware of their rights.
It is also necessary for you to set up a qualifying pension scheme. This could involve working with an Independent Financial Adviser to review any existing pension arrangements or to design a new scheme that will suit the automatic enrolment criteria.
Once set up, you will be responsible for ensuring that both employee and employer contributions are paid into the scheme at the correct amount and the payroll accurately reflects these contributions.
Throughout each stage of the automatic enrolment cycle, you must create and maintain detailed records. These records must be available for review by The Pensions Regulator whenever requested.
Your employees must be aware of their rights and you must be aware of your duties and be ready to act on them to avoid breach of the rules and imposition of financial penalties.