Running a business comes with many responsibilities, and ensuring you meet your legal duties regarding workplace pensions is one of them. If you employ at least one person, you are legally required to set up a pension scheme and enrol eligible employees into it – a process known as auto-enrolment.
Today, we are going to explain how to manage workplace pensions and auto-enrolment for your small business.
What is Auto-Enrolment?
Auto-enrolment was introduced to help more people save for retirement. It means that employers must automatically enrol eligible employees into a qualifying workplace pension scheme and make contributions to their pension.
Employees who are aged between 22 and the State Pension age, earn at least £10,000 ayear, and work mainly inthe UK must be enrolled. However, employees who do notmeet these criteria can still choose to opt into a scheme if they wish.
Setting Up a Workplace Pension Scheme
If you don’t already have a scheme in place, you’ll need to set one up before your ‘duties start date’, which is when your first member of staff begins working for you.
Key steps you need to include:
- Choosing a pension provider. There are lots of providers available. The best thing to do is look for one that is authorised for auto-enrolment and suits your business size and needs.
- Communicating with your staff. You must write to your employees to let them know how auto-enrolment affects them.
- Registering with The Pensions Regulator. You’ll need to complete a declaration of compliance within five months of your duties start date.
Assessing Your Workforce
You must assess your workforce every time you run payroll.
You will need to check:
- Who needs to be auto enrolled
- Who has the right to opt-in
- Who has the right to join a pension scheme (but not receive employer contributions)
It’s important to remember that eligibility can change over time, so ongoing assessments are important.
Processing Contributions
Once employees are enrolled, you need to:
- Deduct employee pension contributions from their wages
- Add your employer contributions
- Pay both contributions into the pension scheme by the agreed deadlines.
The minimum contributions currently are a total of 8% of qualifying earnings, with at least 3% coming from the employer.
Keep Records
Maintaining accurate records is a legal requirement. You must keep:
- Details of staff enrolled, and contributions paid
- Staff opt-in and opt-out notices
- Pension scheme reference details
Records must be kept for six years (four years for opt-out notices).
Re-enrolment and Ongoing Duties
Every three years, you must re-assess your staff to check if any who previously opted out should be re-enrolled. You must then complete a re-declaration of compliance with The Pensions Regulator.
How Cloud Bookkeeping Warwick Can Help
Processing workplace pensions and managing auto-enrolment can feel overwhelming, but you don’t have to do it alone. As experienced bookkeepers and accountants, we can set up your pension scheme, handle payroll deductions, ensure compliance with The Pensions Regulator and keep your records up to date–giving you complete peace of mind.
If you would like support with workplace pensions, payroll or bookkeeping, please get in touch with us today for a free consultation.