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Auto-enrolment: Know your staging date

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24th Apr 2013
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Employers need to find out their auto-enrolment staging date to start planning for the major switch and avoid an administrative nightmare.

As outlined by Paul Rai of Kudos Financial Services at a Mattioli Woods pension seminar in Bristol this week, the most important consideration at this stage is finding out the date from which the new duties apply.

“You need to find out your exact staging date, which will then allow you to plan effectively,” Rai advised.

The staging date is determined by records held by HMRC as at 1 April 2012, based on the number of people you have in your largest PAYE scheme.

“If you’ve got more than two staff you’ll need to set up an arrangement and plan ahead, with at least a nine-to-12-month window for SME companies with no legacy benefit complications,” said Rai. “The process takes a lot longer than most expect”.

Top 10 client tips

· Be sure of your clients staging date

· Prepare early

· Engage all stakeholders

· Establish costs and budget

· Review the existing scheme

· Make sure staff data is clean and complete

· Decide how you will process auto-enrolment

· Have a project plan

· Communicate and engage with employees early

· Embed it in your client review processes

Late last year NEST chief executive Tim Jones echoed this advice, but warned companies would need to allow at least 18 months of preparation to deal with the complexities of automatic enrolment.

Employers can find out their specific date by contacting The Pensions Regulator, with whom they must also later register with to show they are complying with the law.

Once you have found out your staging date, you will then need to decide on what pension arrangement you want to use. 

Many companies will have legacy pension schemes in place and possibly a mix of arrangements including defined benefit if the company is more than 10 to 20 years old. A qualifying scheme will need to follow an audit of existing arrangements and market alternatives, taking into account costs, administration processes, fund options, and provider solvency.

Employers will need to assess their workforce eligibility, which will be split into three categories – eligible jobholders, non-eligible jobholders and entitled workers. Qualifying earnings are a band of earnings of more than £5,668 and £41,450 or less for 2013/14, and are expected to increase every year.

Payroll cleansing will then need to take place, however this is a burden which should be somewhat eased following the recent move to Real Time Information for PAYE.

After communicating the changes to all of your workers, employers can then auto-enrol eligible jobholders, keep records and pay the minimum contributions.

By October 2018 total auto-enrolment contributions will be 8%, which includes 3% from the employer.

The Pensions Regulator will be responsible for making sure you comply with employer duties. If an employer fails to comply with the original compliance notice and subsequent penalty notices, they may face daily escalating penalties up to £10,000 per day.

Paul Rai is a senior consultant at Kudos Financial Services, employee benefit specialists at Mattioli Woods Group, the Leicester-headquartered pension consultancy and wealth management business. None of his comments are to be taken as specific advice relevant to any client.

Replies (7)

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By johnjenkins
25th Apr 2013 09:08

Fines won't matter

when you're bankrupt or in liquidation.

This should be really fun. Watch out for the U - turn.

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By Robert Hurn
25th Apr 2013 12:51

Over Retirement Age

2 of my four employees (4 includes myself) are over retirement age and drawing state pension.  I assume that the two older members of staff are exempt from auto enrolment obligations?

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By TheTaxBoy
26th Jun 2013 09:45

Auto-Enrolment

 

Bobhurn,

 

You are correct that the "older" members of staff do not need to be auto-enrolled, however should they ask to be, you will need to enrol them.

This is applicable up until the age of 74.

 

Pinny

 

 

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By ireallyshouldknowthisbut
25th Apr 2013 16:17

.

Its going to be like the working time directive all over again.  Management standing over staff with a pen in their hand signing waivers, allbeit no-one seems to give a stuff about that legislation any more. 

Still not for a couple of years yet, no panic yet. 2017 or something. 

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By Wiganer Elaine
26th Apr 2013 15:08

1 staff member?

I have had a look on the Pension Regulator website and that seems to indicate that ALL employers who pay a member of staff over £9440 (in 2013/14) will have to have a scheme in place to auto enrol the said member of staff.

The OP seems to suggest that this scheme applies only to employers with more than 2 Members of staff? (ie 3 or more?).

Can anyone clarify this?

Thanks

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By DMGbus
26th Apr 2013 19:04

Staging date chart - number of employees

http://www.thepensionsregulator.gov.uk/employers/staging-date-timeline.aspx

From this it can be seen that for employers with less than 30 employees it is at least 2 years away.(ie. mid 2015 onwards).

Now, whether this needs 18 months of "preparation" incurring expensive fees of financial advisors is another matter.

As far as I see it too much money is at risk of being consumed by financial advisors,

Another scheme with ostensibly good intentions, but at risk of being undermined by the financial services industry carving themselves a cut.

Cynics might say that it was devised to help the financal services industry rather than workers.

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By Robert Hurn
29th Apr 2013 09:37

FSB

I understand that the FSB will have a scheme aimed at smaller employers, I've not seen the detail but may be worth checking out

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