There are new laws that have already been introduced regarding work place pensions.
If you’re an employer you’ll be legally obliged to automatically enrol your employees into a
workplace pension scheme, rather than them actively choosing to join your scheme; and if they don’t want to be in, they must actively opt out.
We are moving ever nearer to deadline for all employers to enter Auto enrolment and some employers have already been fined for failing to enroll their employees.
A small or medium size business staging date is likely to be between 2014 and 2016.
Some may be a bit later.
The Pension’s Regulator will likely contact employers 6 to 12 months before their staging date but they recommend being prepared 12-18 months in advance. You can find out your staging date by looking at The Pensions Regulator site.
All employers with at least one member of staff must enroll those who are eligible into a
workplace pension scheme and contribute towards it.
Clearly there are costs for employers:the actual cost in money terms of paying a % salary for all workers as well as considerable costs of compliance. One way of reducing costs is to enter into a salary exchange agreement with employees but this should be done well in advance of the staging date.
All employers need to take steps to make sure their eligible staff are enrolled into a pension scheme. Even if they already pay contributions into a pension scheme for staff, they must ensure it is suitable for automatic enrolment.
Automatic enrolment is a legal duty and if an employer doesn’t act they will undoubtedly be heavily fined. Good professional advice should always be taken.
But what about Directors and Auto enrolment?
How are very small limited companies and their director(s) affected? At last there is some good news! This hinges on whether a director is considered to be a worker.
A director of a company is not classed as a worker unless he or she works for the company under a contract of employment and there is at least one other person working for the company under a contract of employment.
A director who is not working under an employment contract is never classed as a worker and these rules also apply if there is more than one director of the same company. Although companies are no longer required to have one,similar considerations will apply to the office of Company Secretary.
What to do next?
You cannot just ignore the issue and hope it will go away. If you believe that automatic enrolment duties do not apply to you as a director or your fellow directors you must let The Pensions Regulator know.
You may recive a letter from the Regulator which advises you of your staging date.
You should visit www.tpr.gov.uk/employers/what-if-i-dont-have-any-staff.aspx
where you will find a pre-populated email to send to them which should ensure the record is updated to show that your company is not an employer.
The pre-populated email contains the following-
1. I confirm that [add your company name here] is not an employer for the purposes of automatic enrolment for the following reason.
[please select one option from the list below and delete the others]
a) There is only one director and there are no other staff working for the company.
b) The only people working for the company are directors and none of them have an employment contract.
c) The only people working for the company are directors and only one of them has an employment contract.
d) The company does not or no longer employs any staff because it has ceased trading/is terminally insolvent eg has gone into liquidation/has been dissolved.
2. The letter code for the company is: [add your letter code here]
3. The PAYE scheme(s) reference is: [add your PAYE reference(s) here]
4. The Companies House number (where applicable): [add your Companies House number (if you have one) here]
5. The name, email address, address and telephone number of contact at the company: [add these details here]
If circumstances change and auto enrolment becomes applicable you will must notify the Regulator and take necessary action to enrol.