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Workplace pensions – there’s no need to miss your staging date…!
Recent research by Aviva has shown that one in seven companies who set up pensions with Aviva in the last quarter of 2016 actually missed their deadline, or Staging Date, for setting up a workplace pension. By my calculations, that means on average around 15% of businesses aren’t complying with their legal duties on time and are very likely to receive a fine from The Pensions Regulator. This is just money down the drain for a small business, and so easy to avoid if confronted early on.
The Pensions Regulator is sensibly recommending that companies set up their schemes around 6 months in advance of their deadline, which is good advice, because 2017 is by far the busiest year for pension providers, with 750,000 companies being allocated a staging date. Some providers may have a long waiting list this year, and any delays in setting up your scheme may lead to a failure in meeting your deadline and a subsequent fine – no excuses.
I suspect that companies are leaving their workplace pensions on the ‘to-do’ pile until the last minute, and then they find that choosing and setting up their scheme, if done properly with thought and consideration for a good employee outcome, takes a lot longer than they thought.
But this doesn’t surprise me – I’m a small business owner myself – and I can certainly sympathise. Small businesses are often stretched to capacity, and it’s likely that the responsibility for workplace pensions will fall on the director or business owner, who tends to be the busiest of the bunch! This is where professional advisers come into their own, because they’ve done all of the research beforehand, and if they specialise in workplace pensions then their knowledge and experience will be a great timesaver.
So what if you do miss your staging date? Well, it’s a legal deadline, there’s no getting around it, so there are repercussions for your business. If you’re within 6 weeks of your staging date then you should issue statutory postponement letters straight away, set up your scheme and enrol your employees within 3 months of staging.
If your staging date was more than 6 weeks ago then you can’t apply postponement and things get a bit more complicated. You’ll need to set up your scheme straight away and work out the contributions that should have been paid into the scheme since your staging date, and it’s likely that the company will also have to pay the backdated employee contributions too.
Towards the end of last year The Pensions Regulator confirmed that there had been a staggering rise in penalties for small businesses for non compliance, with more that 20 times more businesses getting an escalating penalty notice than in earlier quarters. An escalating penalty notice imposes a daily fine of between £500 and £10,000 a day, so best to be avoided!
If you’re getting close to your staging date and haven’t had time to sort out your workplace pension, we can turn things round quickly and easily, taking the pressure off you. We’re here to make sure that you choose a quality scheme and we’ll help you to design your scheme to keep costs and administration to a minimum.
If you need help, please call Sarah or Adele on 0800 160 1233 or fill in the Get Started page on our website and we’ll get back to you straight away.
We’ve spoken to a number of employers who are keen to get their employees into a workplace pension scheme straight away, rather than waiting for their deadline, or staging date, which is set by The Pensions Regulator.
Why on earth would anyone want to do this any earlier than they have to?! Actually, we’ve come across quite a few reasons why…
One of our smaller clients, a car sales company with 11 employees, could ill-afford pay increases, so they decided to introduce their workplace pension scheme early instead of giving pay rises this year. To do so is more tax efficient for the business. The employees still receive a positive benefit rather than a nil pay increase, and the employer can offset the cost of their contribution against profits, reducing its corporation tax bill.
Pension schemes are a very attractive employee benefit these days, which is why so many businesses have them up and running already. Candidates are becoming increasingly aware of the perks of each job they apply for. You wouldn’t want to miss out on the best employees because your benefits were less attractive than those of a competitor….
Some businesses have more than one PAYE scheme under the company ‘umbrella’. Businesses in this position tend to align later staging dates with their earliest staging date to save time and costs. It’s more practical to deal with all of your businesses in one go and, importantly, it’s helps staff morale if they are all treated equally regardless of the PAYE scheme they belong to (especially if staff share office premises).
A larger client of ours wanted to introduce their workplace pension at the beginning of their company year because that’s when they award pay increases. Aligning your staging date with the start of your financial year can be a cleaner approach from an accounting perspective in terms of setting budgets and calculating pay increases.
If you want to bring your staging date forward, The Pensions Regulator’s website holds a list of possible brought forward dates you can choose from. Visit www.thepensionsregulator.gov.uk for more information.
You’ll need to bear in mind that if you bring your staging date forward, you can’t change it back again – the new date will apply and fines can be imposed if you miss your new deadline.
As always, getting the right advice at the outset is really important. If you would like to talk through your circumstances with an auto-enrolment expert, please give us a call on 0800 160 1233. We’ve got lots of useful information and guidance on our website if you need it: http://www.aefasttrack.com/
When a business owner or director gets around to dealing with their workplace pension, it can be difficult to know where to start and who to turn to for help. Many people I’ve spoken to have been putting things off, and then panic ensues and it’s a rush job….
If this touches a nerve with you as an owner or director of a small business, my advice is ‘don’t leave it until the last minute!’ because choosing, designing and setting up your pension scheme is something that shouldn’t be rushed – give yourself 6 months to put your scheme in place. The choices that you make about your workplace pension scheme should be informed, researched and understood – it’s your business, and it’s your responsibility to do the right thing for your company and for your employees. If you choose your scheme wisely you can avoid ongoing employer charges, and your employees will enjoy lower annual management charges which could make a difference of several thousand pounds to each employee’s pension fund when they come to retire. There’s also the very real risk of a smaller pension provider going belly-up. The decisions you make now will directly influence the quality of life your staff can enjoy in their later years – that’s a big responsibility to take on yourself, so getting good advice and the right support can provide the reassurance you need that you’ve done the best you can.
Our typical client wants to get compliant quickly and cost-effectively, through a well-established, safe and secure scheme which performs well. And help with HR is also useful – you’ll need to update your employment contracts, provide a pension policy for new employees and let your existing employees know what’s going on. If you run an in-house payroll, then you’ll most definitely need guidance around payroll administration too.
Our AE FastTrack service covers all of these important issues for you. Because we’re pensions people, we understand better than most the importance of scheme choice and design. Most people we meet want to do the right thing for their employees and they understand that there’s a bit more to it than simply filling in an application form.
We’ve set up workplace pension schemes for hundreds of businesses to date, and our aim is to make life easier for those facing the challenges of auto-enrolment. If you would like to talk through your circumstances, please give our friendly and experienced team a call on 0800 160 1233. We’ve got lots of useful information and guidance on our website if you need it: http://www.aefasttrack.com/
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"We wanted to embrace Auto-Enrolment to get good pensions in place for our team early. We interviewed a couple of companies to assist us, and Sarah gave a very good case for her company. We are confident that we made the right decision! From selecting the right provider, through to setting up the systems and even presenting to our staff, Sarah and her team were excellent. I don't hesitate recommending the Auto-Enrolment Bureau to anyone looking to enrol their company. My only words of advice are, do it early!"
Richard Hardstaff, Director, Polydron (UK) Ltd