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Auto Enrolment : Stay on the right side of the law

21st Oct 2015
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Follow Amanda Chadwick’s top tips and you – and your clients – won’t go wrong when it comes to pensions auto enrolment

As staging dates get closer, auto enrolment is at the top of employers’ and accountants’ lists of things to sort out. I have been travelling up and down the UK delivering talks on pensions and the connection with employment law to all different types of businesses, and trying to make things simple. I thought it might be useful if I list some of the action points for your clients who are employers.

• Employers, don’t bury your head in the sand or use methods (like a drink down the pub and a back hander) to persuade employees not to be interested in a pension! This will come back to haunt you. None of this is going away – people aren’t saving enough for retirement and we are living longer.

• Make sure the details the Pensions Regulator has for you are correct, it is your responsibility and there are no excuses. • Find out your staging date – don’t be late staging, as you will incur a one-off and then daily fines.

• Check your workforce status – employment law here! It isn’t just the ordinary employed staff members you should be considering but self-employed, contractors and agency workers. Remember, you usually find out that someone isn’t self-employed when you try to end that relationship.

• Identify your employee’s eligibility, it is based on age and earnings – and beware! Eligibility can change at each pay period as age changes and earnings can too!

• Familiarise yourself with jobholder definitions:

Eligible jobholder: Must be automatically enrolled into auto enrolment scheme and both employer and employee contribute. Non-eligible jobholder: Employer must provide the employee with information about the auto enrolment scheme, and if the employee chooses to opt in both the employer and employee contribute.

Entitled worker: Employer has to write to employee to inform them of the pension scheme. If the employee chooses to opt in the employer does not have to contribute.

• Communication: Each stage has a letter-writing exercise and an employer should keep a record of this. This is vital, as an employer will rely on this documentation as evidence if an employee says they knew nothing about a pension scheme and were never offered one.

• Employment law: It is an employer’s legal obligation to issue a statement of main terms within eight weeks of an employee commencing employment – employers without contracts need to get them in place now. Statement of main terms needs to include the pension provider. Policies need to include mention of pensions, rollout and communication process, including opt-out procedures.

• Probationary period: I would wait for an employee to successfully complete a three-month probationary period before enrolling them into my pension scheme. If this is the case this needs to be written into any probationary period. Finally, I know this will be the new PPI phone call that everyone receives, and do you know how I know? I received my first call three weeks ago asking: “Has your employer offered you a pension scheme?” They are already targeting the companies that have staged.

Well, you all know me by now – I am here to protect the employer and help them keep one step ahead. So I nicely told the company who telephoned me where to go.

• Amanda Chadwick, Employment Law and Health & Safety Presenter, Peninsula Business Services. If you need any advice on the above or any employment law matter you can contact her at [email protected] or call on 0844 892 2802.

This article is taken from “Accounting Practice” the ICPA quarterly magazine. Dedicated to supporting and promoting the needs of the general practitioner. You can find us at www.icpa.org.uk or email [email protected] or by phone on 0800-074-2896.

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