If your business is not already making changes to comply with new Pension regulations then the clock is ticking. Even if you have already laid the groundwork, then your accountant could be the key to making sure it is efficiently integrated into payroll systems, as well as business growth plans.
Reminders about new auto-enrolment rules
If you’re still confused, here’s a quite recap on the new company pension laws and the mandate to automatically enrol all eligible employees.
There has been a big push on getting everyone in the UK saving towards their retirement as soon as they start work, relieving state funds of the huge burden that an increasingly ageing population is bringing.
The new pension laws have already forced larger firms to enrol millions of staff into company pension schemes. This year the focus is on smaller companies – with each one being issued with a “staging date” to start setting up the necessary systems.
Smaller enterprises or partnerships are not immune. In fact, the new laws affect you even if you only employ one person.
As soon as someone has been in your employment for six weeks, is aged over 22 and earns over £10,000 a year, they become eligible for auto-enrolment.
The new mandate doesn’t exclude temporary, part-time or seasonal workers either. If someone earns more than £192 in a week (or £833 in a month), they must be enrolled.
If you think that it was a one-off that a member of staff hit the threshold, you can seek a three-month postponement but only if you write to the employee explaining why you postponed.
How does it affect payroll?
The rules on auto-enrolment currently dictate that the qualifying employees must have 1% of their salary paid into a company pension scheme. Employers must match this. The amount is set to increase in the coming years, rising to a 3% contribution from both.
If staff earn between £5,824 and £10,000 they must still be offered the option to opt into your company pension scheme. You then make the payroll adjustment including adding your own matched contribution.
If they earn less than £5,824 and choose to opt in, employers are not obliged to pay in their share.
Do employees have to stay in?
After a month, your employees can choose to opt out of your company pension scheme. You must then schedule a process of auto-enrolling them back in every three years. This system is designed to scoop up anyone who drops out to encourage them to “rethink”.
Implications for accounting
Clearly, costs are involved for companies – not just setting up and running company pension schemes but also training staff and adjusting payroll systems.
If you are forced to make this sort of investment, you will need to know that the cost is manageable and the end result is sustainable.
Much of modern chartered accounting is not simply “number crunching” and doing your tax returns. An accountant worth having will help use your current status and ambitions to formulate sound financial predictions and help inform business decision making.
This now has to include helping you to choose a pension provider if needed. But it is also about supporting the process of integrating pension payment systems, payroll and accounting systems.
This all dovetails with the new data protection laws due to come into effect in 2018, and the need to encrypt personal information and hide identities using pseudonyms.
This complex legislation further shakes up the already heavy responsibilities for HR teams.
Where to get help
Getting the right support from our responsive and well-informed accountants in Bristol – who are attuned to local companies – can greatly reduce the administration burden on your business.
Call Dunkley’s today to put the responsibility for overseeing this change into the right hands.