Before we take you through the discussion on the many facets of specialising in auto enrolment, you must know what this auto-enrolment is all about at the first place and how it connects with you. After all, a problem well defined is half solved.
What is an Auto-enrolment?
An auto-enrolment means an automatic enrolment process that asks the employers for enrolling their employees to the pension schemes, making contributions for them, and managing records as well on the same for the present and the future. Hence, an auto-enrolment essentially relates to the compulsory workplace pensions as required by the law of the land.
It is important to mention here that different countries may have different rules specialising in auto enrolment. However, there is no conflict on the purpose of it as they all aim to increase pension savings. This has become necessary by an increase in the average lifespan of the people after the retirement. The drive for specialising in auto enrolment can, therefore, be seen as an endeavour for securing the life of the retirees in UK, for instance, with the added bonus of the employer’s contribution and the tax-relief.
Employer’s Obligation for the Auto-enrolment in UK:
1) Stakeholder pension scheme: You do not have any obligation for specialising in auto enrolment if you employ less than five staff members. But, an auto-enrolment becomes compulsory when you employ five or more staff members in UK. In such a case, you have to provide access at least to a stakeholder pension scheme.
2) Starting date: You should know that your statutory compliance date for specialising in auto enrolment starts from April 1, 2012, based on your number of employees as on that date alongside your PAYE (pay as you earn) reference number.
3) Things to do: It involves a series of activities in UK such as the following.
- Setting up an internal process at the workplace and then, registering for a pension scheme befitting the auto-enrolment scheme
- Assessing the eligibility of the staff members on each pay cycle
- Must take up an auto enrol and making contribution on each eligible staff member
- Successfully managing the auto-enrolment and keeping records of the joining as well as opting out by the employees
- Keeping track records on compliance of the auto-enrolment
4) Contributions under the scheme: There is a specific requirement by the law on an employer’s contribution here. There are different methods for arriving at the contribution amount under the schemes.
5) Enforcement: The enforcement involves three distinct stages; namely Stage 1, Stage 2, and Stage 3 on the part of the UK government.
- tage 1: It deals with the breach and the penalty thereon. So, it’s essentially contribution unpaid notice.
- Stage 2: It involves issuing a fixed penalty notice amounting 400 pounds as on date.
- Stage 3: It’s a stage invoked by the failures of the first two notices and imposes a daily penalty based on the number of employees.
You can speak to a financial adviser for specialising in auto enrolment for your business in UK.