The Pensions Regulator is getting tough.
Not only were 15 enforcement notices handed out last week, one company was fined £108,000 for missing their Staging Date and incorrectly calculating contributions.
Every business, including yours, will need to comply with the new legislation if you are to avoid a fine, so we’ve pulled together seven quick tips to help you along the way.
Tip #1: Make sure your data is accurate
This might sound obvious and almost without exception every employer we have spoken to have said their data is accurate and up to date.
The reality? Most employers have gaps in their data, particularly when it comes to employee addresses, telephone numbers and email addresses, all vital for communication with staff.
It’s also easy to underestimate the amount of data required to assess your workforce, enrol employees and calculate contributions.
Accurate data takes time to produce, don’t assume your data is accurate or leave this job to the last minute; it will hold up all other aspect of the project.
Tip #2: Understand the important dates
Employers will naturally focus on their Staging Date, but it’s important to understand how this interacts with other key dates such as pay reference periods and pay cut-off.
If you plan to postpone that adds in another layer of complexity.
Any good project plan will have key dates for you to work towards; successfully meeting your Automatic Enrolment obligations is no different.
Tip #3: Leave time to review existing schemes
Employers who already offer a workplace pension will need to leave enough time to review the scheme and confirm whether or not it can be used for Automatic Enrolment.
We’re concerned too many employers will fail to comply with the legislation, in the mistaken belief that their existing scheme does the job. Of course it might, but then again, especially with the introduction of a charge cap, it might not.
If you run an existing scheme leave at least a month to carry out a review and confirm whether or not it can be used.
Tip #4: Employment contracts
The Automatic Enrolment legislation might mean you need to alter employment contracts, possibly for existing staff, but certainly for new recruits.
For example, it is common for employers to offer a pension to new staff at the end of their probationary period, a perk reflected in the employment contract. Once you have gone past your Staging Date this won’t comply with the rules and will have to be altered.
Make sure you leave time to review your employment contracts and ensure any changes for existing staff are introduced in compliance with employment law.
Tip #5: Don’t take too long to make decisions
There are some key decisions you will have to make, for example:
- Whether not to postpone
- Which definition of earnings, and therefore contribution levels, to use
- Which pension provider to use
- Will you run the project ‘in-house’ or bring in an expert?
All these things, and more, take time to decide.
Taking too long to make decisions, perhaps only discussing the matter at board meetings, can lead to project paralysis and your Staging Date creeping ever closer, whilst your project plan slips.
Of course you need to make the right decisions, just don’t take too much time over them!
Tip #6: Designate a point man
In military terminology a point man is someone who takes responsibility and leads the way forward.
That’s exactly what your business needs to successfully implement Automatic Enrolment.
It might be the Managing Director, but it could equally be someone from Human Resources or Payroll, or indeed an outside expert such as an Independent Financial Adviser or Accountant.
Whoever they are make sure they have the right knowledge and skills, then empower them to make decisions and run the project.
Tip #7: Engage and communicate with employees
Most of your workforce will have limited knowledge of Automatic Enrolment.
Sure, they might have seen the adverts on TV and will probably recognise Karren Brady, Nick Hewer and Theo Paphitis, but they probably don’t know much more.
Engaging with your workforce early and telling them what’s happening, will help tremendously. Not only will it cut down on questions when you reach your Staging Date and contributions are taken, it will also help your staff to feel that they are getting something which will benefit them in the long term.
Whether it’s through written communication or employee workshops make sure you communicate the changes early and often.
How can Investment Sense help?
We know many employers are concerned about their Automatic Enrolment obligations and we’re here to help.
We’ve developed a four stage process to ensure your business is compliant by your staging date and sticks to the rules in the months and years to come.
If you:
- Would like to know your staging date
- Have a question about Automatic Enrolment
- Would like to know how you can comply with the new rules
Then get in touch today, to put it bluntly, this problem isn’t going away and your staging date is only getting closer.
We’re here to help, call us on 0115 933 8433 or email info@investmentsense.co.uk
