Arthur BeverlyPWP IFA FU Apr14 autoenrolment
FINANCE UPDATES
APRIL 2014
Auto enrolment for businesses This guide looks at the implications of pension auto enrolment for businesses.
The law on workplace pensions has changed to make it easier for people to save money for their retirement. Automatic, or auto, enrolment means every employer must automatically enrol eligible staff into a qualifying pension scheme. When you will have to start depends on your staging date but many businesses already have auto enrolment in force. Employers with 250 or more people in their largest PAYE scheme started auto enrolment between October 2012 and February 2014. The staging date for employers with 160-249 people in their largest PAYE scheme was 1 April 2014.
Employer duties As an employer, you have a number of obligations under auto enrolment. These include: •
registering with the Pensions Regulator
•
identifying eligible workers
•
enrolling workers into a pension scheme
•
arranging membership for workers who choose to opt in or join
2 Stewart Street Milngavie Glasgow G62 6BW 0141 956 5525 [email protected]
Business UPDATE Identifying workers
•
managing opt-outs
•
providing information to employees.
Identify staging date You can find out your exact staging date on the Pensions Regulator website using your PAYE reference but the dates outlined below give you a rough idea: Number of employees in largest PAYE scheme
Staging date
250+
1 October 2012 – 1 February 2014
50-249
1 April 2014 – 1 April 2015
Less than 50
1 June 2015 – 1 April 2017
New employers set up between 1 April 2012 and 30 Sept 2017
1 May 2017 – 1 February 2018
Once you know your staging date you can start preparing. You may also choose to postpone the assessment of certain workers for up to three months.
A worker is defined as someone who either works under a contract of employment or has a contract to perform work or services personally, not as part of their own business. There are different categories of worker for auto enrolment purposes, which can be defined as: •
jobholders (including eligible and non-eligible)
•
entitled workers
Eligible jobholders You must automatically enrol workers who are: •
aged between 22 and state pension age
•
work or ordinarily work in the UK
•
earn above £10,000 for the 2014/15 tax year.
Non-eligible jobholders Non-eligible jobholders do not qualify
www.abfm.co.uk
Auto enrolment for businesses for automatic enrolment but can choose to opt in to a pension scheme. These are workers who are either: •
aged between 16 and state pension age
•
work or ordinarily work in the UK
•
earn less than £10,000 for the 2014/15 tax year.
•
be tax registered
•
satisfy certain minimum requirements (these vary depending on the scheme type).
Non-UK based schemes must:
Inform staff
•
be an occupational pension scheme and there must be a regulatory body for occupational pension schemes in its country of origin; or
One of your main responsibilities as an employer is to provide information to your workers, whatever category they fall into. You will need to provide specific information tailored to your employees’ needs to make sure they fully understand auto enrolment and how it affects them.
Or are: •
aged between 16 and 21, or between state pension age and 74
•
be a personal pension scheme in a country that has a regulatory body for personal pension schemes
•
work or ordinarily work in the UK
•
•
earn more than £10,000 for the 2014/15 tax year.
also meet other criteria, such as being a qualifying recognised overseas pension scheme.
Entitled workers
A scheme also needs to meet automatic enrolment criteria, including:
These workers are entitled to join a pension scheme. They are:
•
it must not contain any provisions that prevent you from making arrangements to auto enrol, opt in or re-enrol; or
•
require the job holder to express a choice in relation to any matter or to provide any information in order to remain an active member of the scheme.
•
aged between 16 and 74
•
work or ordinarily work in the UK
•
do not have qualifying earnings payable by you.
Choosing a pension scheme Once you have completed an initial assessment of your workforce you will know whether you will have to take part in auto enrolment. If you do, you will need to select a qualifying pension scheme. The scheme can be based in the UK or within the European Economic Area. If you already offer a pension scheme you may continue to offer it, provided it meets certain criteria. A qualifying scheme must meet the following:
UK based schemes must: •
be an occupational or personal pension scheme
These will include preparing data and a process for contractual enrolment as well as other responsibilities, such as how the scheme will be funded. You will also need to be ready for opt-outs and opt-ins.
If the scheme is a money purchase scheme it must not contain any provisions that allow an amount to be deducted from a jobholder’s pension pot or contributions, or the value of the pension rights to be reduced by any amount if that amount is to be paid to a third party. There are additional criteria for non-UK pension schemes so it is important to seek professional advice.
Administrative procedures Once you have chosen your pension scheme you need to start putting administrative procedures in place.
Important information This document is solely for information purposes and nothing in this document is intended to constitute advice or
Keep records There are legal requirements for you to keep records about your workers and the pension scheme used to comply with your employer duties. These can be kept electronically or through a paper filing system and must be kept for six years. These records will need to be produced for the Pensions Regulator if requested.
Make contributions You will need to deduct contributions from staff salaries and pay these and your own contributions into your pension scheme. The level of minimum contribution you have to make is as follows:
Date
Employer minimum contribution
Minimum total contribution
Employer's staging date to 30 September 2017
1%
2%
1 October 2017 – 30 September 2018
2%
5%
1 October 2018 onwards
3%
8%
Getting auto enrolment right is vital to reducing the impact on your employees and your business. Seeking expert advice can help, so please contact us to discuss auto enrolment and your specific business needs.
a recommendation. You should not make any decisions based upon its content. This information is based upon our understanding of current requirements, which may change in the future. Whilst considerable care has been taken
to ensure that the information contained within this document is accurate and up-to-date, no warranty is given as to the accuracy or completeness of any information. E & OE.
Arthur Beverly Financial Management is authorised and regulated by the Financial Conduct Authority. Financial Services Register number 485198. Registered in Scotland Number 342744. Registered Office: 22 Backbrae Street, Kilsyth, G65 0NH
APRIL 2014
Auto enrolment for businesses This guide looks at the implications of pension auto enrolment for businesses.
The law on workplace pensions has changed to make it easier for people to save money for their retirement. Automatic, or auto, enrolment means every employer must automatically enrol eligible staff into a qualifying pension scheme. When you will have to start depends on your staging date but many businesses already have auto enrolment in force. Employers with 250 or more people in their largest PAYE scheme started auto enrolment between October 2012 and February 2014. The staging date for employers with 160-249 people in their largest PAYE scheme was 1 April 2014.
Employer duties As an employer, you have a number of obligations under auto enrolment. These include: •
registering with the Pensions Regulator
•
identifying eligible workers
•
enrolling workers into a pension scheme
•
arranging membership for workers who choose to opt in or join
2 Stewart Street Milngavie Glasgow G62 6BW 0141 956 5525 [email protected]
Business UPDATE Identifying workers
•
managing opt-outs
•
providing information to employees.
Identify staging date You can find out your exact staging date on the Pensions Regulator website using your PAYE reference but the dates outlined below give you a rough idea: Number of employees in largest PAYE scheme
Staging date
250+
1 October 2012 – 1 February 2014
50-249
1 April 2014 – 1 April 2015
Less than 50
1 June 2015 – 1 April 2017
New employers set up between 1 April 2012 and 30 Sept 2017
1 May 2017 – 1 February 2018
Once you know your staging date you can start preparing. You may also choose to postpone the assessment of certain workers for up to three months.
A worker is defined as someone who either works under a contract of employment or has a contract to perform work or services personally, not as part of their own business. There are different categories of worker for auto enrolment purposes, which can be defined as: •
jobholders (including eligible and non-eligible)
•
entitled workers
Eligible jobholders You must automatically enrol workers who are: •
aged between 22 and state pension age
•
work or ordinarily work in the UK
•
earn above £10,000 for the 2014/15 tax year.
Non-eligible jobholders Non-eligible jobholders do not qualify
www.abfm.co.uk
Auto enrolment for businesses for automatic enrolment but can choose to opt in to a pension scheme. These are workers who are either: •
aged between 16 and state pension age
•
work or ordinarily work in the UK
•
earn less than £10,000 for the 2014/15 tax year.
•
be tax registered
•
satisfy certain minimum requirements (these vary depending on the scheme type).
Non-UK based schemes must:
Inform staff
•
be an occupational pension scheme and there must be a regulatory body for occupational pension schemes in its country of origin; or
One of your main responsibilities as an employer is to provide information to your workers, whatever category they fall into. You will need to provide specific information tailored to your employees’ needs to make sure they fully understand auto enrolment and how it affects them.
Or are: •
aged between 16 and 21, or between state pension age and 74
•
be a personal pension scheme in a country that has a regulatory body for personal pension schemes
•
work or ordinarily work in the UK
•
•
earn more than £10,000 for the 2014/15 tax year.
also meet other criteria, such as being a qualifying recognised overseas pension scheme.
Entitled workers
A scheme also needs to meet automatic enrolment criteria, including:
These workers are entitled to join a pension scheme. They are:
•
it must not contain any provisions that prevent you from making arrangements to auto enrol, opt in or re-enrol; or
•
require the job holder to express a choice in relation to any matter or to provide any information in order to remain an active member of the scheme.
•
aged between 16 and 74
•
work or ordinarily work in the UK
•
do not have qualifying earnings payable by you.
Choosing a pension scheme Once you have completed an initial assessment of your workforce you will know whether you will have to take part in auto enrolment. If you do, you will need to select a qualifying pension scheme. The scheme can be based in the UK or within the European Economic Area. If you already offer a pension scheme you may continue to offer it, provided it meets certain criteria. A qualifying scheme must meet the following:
UK based schemes must: •
be an occupational or personal pension scheme
These will include preparing data and a process for contractual enrolment as well as other responsibilities, such as how the scheme will be funded. You will also need to be ready for opt-outs and opt-ins.
If the scheme is a money purchase scheme it must not contain any provisions that allow an amount to be deducted from a jobholder’s pension pot or contributions, or the value of the pension rights to be reduced by any amount if that amount is to be paid to a third party. There are additional criteria for non-UK pension schemes so it is important to seek professional advice.
Administrative procedures Once you have chosen your pension scheme you need to start putting administrative procedures in place.
Important information This document is solely for information purposes and nothing in this document is intended to constitute advice or
Keep records There are legal requirements for you to keep records about your workers and the pension scheme used to comply with your employer duties. These can be kept electronically or through a paper filing system and must be kept for six years. These records will need to be produced for the Pensions Regulator if requested.
Make contributions You will need to deduct contributions from staff salaries and pay these and your own contributions into your pension scheme. The level of minimum contribution you have to make is as follows:
Date
Employer minimum contribution
Minimum total contribution
Employer's staging date to 30 September 2017
1%
2%
1 October 2017 – 30 September 2018
2%
5%
1 October 2018 onwards
3%
8%
Getting auto enrolment right is vital to reducing the impact on your employees and your business. Seeking expert advice can help, so please contact us to discuss auto enrolment and your specific business needs.
a recommendation. You should not make any decisions based upon its content. This information is based upon our understanding of current requirements, which may change in the future. Whilst considerable care has been taken
to ensure that the information contained within this document is accurate and up-to-date, no warranty is given as to the accuracy or completeness of any information. E & OE.
Arthur Beverly Financial Management is authorised and regulated by the Financial Conduct Authority. Financial Services Register number 485198. Registered in Scotland Number 342744. Registered Office: 22 Backbrae Street, Kilsyth, G65 0NH
