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Auto-Enrolment and UK Workplace Pensions: The Essential Guide

Does it affect my SME?

All UK companies, except sole traders or Ltd companies with only one director (and no other employees), must set up Auto-Enrolment (AE). AE must be implemented by a company specific Staging Date (SD) which for most SMEs will be late 2016 to early 2017.

Broadly, such companies have to make a minimum 1% contribution of salary costs from the SD, then 2% from October 2017 and 3% from October 2018. Employees must make similar contributions rising from 1% to 5% over the same period. Penalties are high for non-compliance.

Although any employee may join, those aged between 22 and the state pension age plus earning >£10,000pa must be enrolled.

The auto-enrolment infographic by Raconteur provides a comprehensive overview based on the Department for Work and Pensions Data.

Source: Racounteur

What do you need to do?

The government website (http://www.thepensionsregulator.gov.uk/) helps take you through the necessary steps which are:

  1. Give the regulator a contact name within your company for correspondence (you’ll need your PAYE Reference number as stated on any correspondence with HMRC).
  2. Find out your SD (http://www.thepensionsregulator.gov.uk/employers/staging-date.aspx).
  3. Find a suitable pension scheme 3-6 months before the SD and ensure that it interfaces with your payroll.
  4. Just before SD, identify the employees to be included (based on their salaries and ages).
  5. Write to all staff, individually, within 6 weeks of SD.
  6. Confirm compliance with the regulator within 5 months of SD.

It’s not yet too late, but invest a little time and start today.