Small business managers have had one onerous burden reduced by the government, which has now decided to revise the dates by which the auto-enrolment pension process for all staff must be commenced and completed. If you haven’t yet managed to start planning for these pension reforms, you’ll be relieved to hear that you may have up to two extra years to prepare and complete the enrolment of your eligible staff.
Higher Contributions to be Phased in
The original announcement that employers’ initial minimum contributions of 1% would quickly rise to 2% and then 3% caused some consternation, to which the government has also responded. The hike to 2% is to be delayed by one year, from October 2016 to 2017, and the further rise to a minimum of 3% will not be enforced until October 2018. The percentage applies to qualifying earnings of between £5,035 and £33,540.
Changes in Staging Dates
Your staging date is the date by which you should have your pension scheme in place and be able to start the auto-enrolment process. As long as you have fewer than 50 people in your PAYE scheme on 1 April 2012, your staging date will not be before June 2015. Then you will have until April 2017 to complete the process for all eligible staff members. If you set up a new business after April, you will have until April 2018 to get everyone enrolled.
Dates are also changed for employers with between 50 and 249 people on their payroll. Larger payroll companies already have dates between 1 October 2012 and 1 February 2014, which are not affected by the changes. As with the smaller companies, the dates are allocated according to the numbers on the payroll at April 1st.
You should be informed of your staging date by the DWP. If you want to check it ahead of that, you may be able to look it up on tables on the Pensions Regulator website, once they have all been updated, but in case of changes to your staff complement, you might as well wait until April, otherwise you might have to check it again.
The Learning Curve for Businesses
According to Steve Weeks, the Minister for Pensions, the government has now done all it can to ease the burden of pension reform on the business world. There is, however, pressure for a campaign to educate businesses on what they have to do when. If you are or will be an employer, you will have to select an appropriate pension scheme and do some financial planning. Your outsourced bookkeepers should be able to advise and help you.