UK government pensions legislation means you will soon have to automatically enrol staff into a pension scheme if you’ve not already done so.
Automatic pensions enrolment began in October 2012 for larger firms and is likely to start impacting on the social care sector in the next 12 months.
Workplace pension provider NEST, the National Employment Savings Trust, has provided us with tips for members about how to deal with automatic enrolment. For more information on the pension schemes it provides see the NEST website.
Top 5 tips for automatic enrolment success from NEST
Automatic enrolment is picking up pace and is likely to be affecting your business soon. Are you ready? NEST shares the Top 5 Tips from employers who have already met their duties to help you navigate your way through the new legislation.
Automatic enrolment was introduced to the UK in October 2012, which makes this October the one year anniversary of its introduction. It is radically changing the pension industry, employer responsibilities and pension provision for millions of workers in the UK.
NEST is already working with a number of employers in the social care sector including; Agincare and Housing 21.
The new legislation requires employers to automatically enrol their eligible workers into a qualifying pension scheme and contribute to their pension pot. The automatic enrolment programme rolls out in stages, with largest employers affected first. After 12 months of automatic enrolment being implemented, now is a perfect time to reflect on what we have learned in the last year and share our experiences with the next wave of employers.
NEST has compiled a list of dos and don’ts to help SME employers learn from the experiences of large employers who’ve already met their deadlines. This article takes you through the dos and what you should be doing to get ready for your new workplace pension duties.
Employer do’s
- Plan early – don’t underestimate how long it will take, talk to your payroll and other providers as soon as possible.
- Assess your workforce – to understand which of your workers are affected.
- Communicate with staff clearly and early; engage and involve. Have a communication plan and involve all relevant departments in your business.
- Examine systems (particularly payroll) to ensure they are ready and capable.
- You may want help – you may want guidance from experts/external advisors.
The first piece of advice? Plan Early. NEST experience indicates that just over half (53%) of employers have spent more than 10 months preparing for the reforms with almost a quarter (24%) taking more than 16 months. Conflictingly, research from NEST shows that there are a number of triggers that galvanise employers into starting their automatic enrolment planning, namely:
- When they are back from summer holidays
- It’s after their year-end (when they’re busy)
- They’ve completed another project (for example RTI)
- 1st January (start of calendar year)
The message from NEST is – you may need more time than you think so plan the time in your diary rather than relying on natural breaks in your working schedule!
Next on the list is to assess your workforce. There are 3 types of workers, eligible, entitled and non-eligible. By carrying out a worker assessment you can identify which category each of your workers belong to and your responsibility to them. This will make your job much easier when you need to automatically enrol your workforce.
The Pensions Regulator has guides to help you with this.
Communication is essential, you should communicate with staff clearly and early and have a communication plan and involve all relevant departments in your business. By using effective communication at the start, you can save time-consuming questions later. NEST has developed tools and templates to help employers get messages across to their workers.
The fourth top tip? Examine systems, particularly payroll, to ensure they are ready and capable for your automatic enrolment needs. Karen Thomson, Associate Director of Policy, Research, and Strategic Visibility at the Chartered Institute of Payroll Professionals (CIPP), comments: ‘Automatic enrolment has required investment in payroll processes and systems, whether in-house or outsourced. The payroll function is best placed to examine the age and earnings of a workforce and determine the number of workers to be automatically enrolled. In addition, payroll can establish the date that workers become ‘eligible’ for contributions, calculating those contributions and managing refunds to workers who’ve opted out’. It is essential that your payroll system can stand up to these new challenges and functions, take the time to properly examine them and if they aren’t doing the job? Act fast to rectify it’.
The final top tip is that you shouldn’t be afraid to ask for help. Whether that is from a financial advisers or maybe your payroll provider, you may want guidance from experts and external advisors. There are also guides published by TPR, NEST and other providers.
To find about more about automatic enrolment and how NEST can help you, please visit: www.nestpensions.org.uk/employers