Auto Enrolment Spotlight on SMEs

The auto enrolment spotlight is now very much focused on small to medium businesses. Over 600,000 SMEs are due to enrol in the tax year 2016/2017.

Under automatic enrolment regulation, all employers must have suitable workplace pension arrangements in place to which they must contribute and automatically enrol eligible workers.

Every employer in the country has been given a staging date, by which they must have enrolled by. The advice to small employers is to know your staging date and start planning early. If you don’t already know your staging date it can be found here.

Key aspects of any planning stage will include:

• Review any existing pension scheme: if there is a pension scheme in place, does it meet the statutory requirements for auto enrolment?
• Choose a Pension Provider: as a small employer, will you opt to go with the National Employment Savings Trust (NEST) or will you shop around for a provider who may better suit your needs?
• Decide how to manage auto enrolment: managing auto enrolment does not have to be a nightmare, financially or otherwise. There are low cost options available to employers; for example BrightPay provides all automatic enrolment functionality as standard, simply process AE with your payroll. Further details on BrightPay’s auto enrolment offering can be found here. 

Although some policy decisions will be harder than others, small employers do not need to dread auto enrolment. Since the program’s roll out in 2012, many of the teething problems have been ironed out, and a number of rules have been simplified and relaxed. In addition, software solutions and support are now far better established, all of which mean SMEs can manage auto enrolment easily in-house.

In addition to the above planning stages, there are other concerns that the small employer may want to start considering:

• Data Quality: are your employee records up-to-date and correct? Incorrect information could result in an employee being enrolled or not enrolled incorrectly, putting your business at risk of breaching statutory obligations.
• Communication: regulations set specific communications which employees must receive from their employer. Are you familiar with these? Can your payroll provider assist you?
• New Employees: there is no qualifying period for auto enrolment, if a new employee meets the age and earnings limits they will need to be enrolled from their first day, even if they are on probation. If you have a probation policy stating the employees must have successfully completed their probation period before they are entitled to join a pension scheme, this will need to be reviewed. Some employers choose to postpone enrolment, this can be done for a period of 3 months, allowing employers the opportunity to assess a new employee.

AE can also pose questions in relation to your contracts of employment, and how different types of workers should be dealt with. Answers to these questions and more can be found here. 

Bright Contracts – Employment Contracts and Handbooks.
BrightPay – Payroll & Auto Enrolment Software.