WHAT IS AUTOMATIC ENROLMENT?

Automatic enrolment pensions were first introduced in 2012 and initially affected the largest employers in the land. However, by 2017 all employers will have to offer access to an employer sponsored pension scheme and they are obliged to contribute for all eligible employees. Eligible employees are over age 22 and under state pension age, and earn more than the threshold for income tax. Younger and older employees can also opt in to the schemes and currently any member not wishing to remain enrolled can opt out.

Automatic enrolment laws apply to all employers in the UK, regardless of size or industry. Each employer has or will be assigned a staging date, the date by which the employer is required to comply with its automatic enrolment duties.

 WHY WAS AUTOMATIC ENROLMENT ENACTED?

Across the UK, millions of people are not saving enough for their retirement. Automatic enrolment laws were enacted in order to help more individuals do so. The aim of automatic enrolment laws is to provide individuals with a source of retirement income in addition to their State Pension.

WHAT ARE AN EMPLOYER’S AUTOMATIC ENROLMENT DUTIES?

It is most important that employers meet their obligations because of the penalty regime for non-compliance. The Pensions Regulator (TPR) is currently escalating penalty notices carrying a daily fine of between £50 and £10,000 against businesses that have failed to comply with their auto-enrolment (AE) obligations. Employers will start to receive notifications 12 months prior to their staging date and this is partly because time is required to make plans. An employer must have a functioning payroll system capable of administering pension payments, select and install an appropriate pension scheme and notify employees of the actions they are taking. Finally, when all is up and running the employer must report to the regulator and explain what they have done to comply.

Employers must comply with specific requirements under the new automatic enrolment laws. This guide provides a step-by-step overview of automatic enrolment process and details what employers must do to comply with automatic enrolment laws. 

Figures from the regulator also revealed a 20% quarter-on-quarter increase in the number of firms that have been issued fixed penalty notices of £400 from 166 to 198. The watchdog used its AE powers 446 times in the first three months of 2015, with the total coming in at 1,962 since the legislation took effect in October 2012. By comparison, the watchdog had only used its powers 23 times up to June 2014.

Separate figures suggest almost one in ten businesses planned to ignore their AE duties. An employer can do all this themselves and use the government default scheme NEST or alternatively advice may be sought. This can help with scheme selection, deciding on contribution basis, default fund selection, postponement options and conclude with practical help with registration. At Willis Wealth Management we offer an end to end service to help employers meet their obligations and educate their employees. 

At Willis Wealth Management we can help you assess the financial provisions you need to put in place to support prudent business protection. We can also help to explain what can often seem a complicated situation in a clear and easy to understand manner. 

Auto Enrolment Summary Guide 2016/17

If you would like further information on Auto-enrolment, please contact the Willis Wealth Management team on 028 9032 9042 or complete our quick enquiry form

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