ACCOUNTANTS have been called on to get to grips with automatic enrolment as thousands of employers will be looking to them for help in the coming months.
Already, more than 11,000 employers have automatically enrolled more than 3 million staff into a workplace pension, but even bigger numbers are still to come.
This year, 32,000 small and medium businesses with between 250 and 50 staff will need to implement automatic enrolment and many of them will be relying on advisers for assistance. Recent research by The Pensions Regulator shows 58% of small employers and 74% of micro employers will turn to their accountant for help. Many of these employers will not have pensions experience or in-house know how.
Whether or not you choose to offer a comprehensive automatic enrolment service or want to simply offer initial guidance, you should ensure to inform clients about automatic enrolment. Advisers should also tell clients exactly what services they will be offering, qnd make sure they are aware that The Pensions Regulator is responsible for ensuring employer compliance with automatic enrolment.
Automatic enrolment is a legal duty
All employers have a legal duty to automatically enrol eligible staff into a work place pension and they must do so by a deadline that is specific to them. Failure to comply could lead to financial penalties.
Clients need to know their ‘staging date' - this is set in law and is the date an employer's automatic enrolment duties come into effect. The employer can find out their staging date by using the regulator's staging date tool.
Auto-enrolment is being rolled out in stages, starting with larger business and, in due course, smaller ones. However, staging dates are based on information held by HMRC in April 2012. Clients' staging date is not based on current headcount.
The Pensions Regulator recently published the staging profile which shows the numbers of employers reaching their staging date in the coming months.
This should not be used by employers themselves, but is a resource for the pensions industry and other advisers, so that they can prepare for the numbers of employers seeking services and advice.
Nominate a contact
Employers must nominate a contact so that the regulator can write to and email the person who will manage or implement automatic enrolment. The employer should identify the most senior person within the business as the primary contact. They should then decide who else needs to know about auto-enrolment on regular basis and nominate them as a secondary contact. This may be another member of staff, payroll provider or indeed their adviser.
Warn the employer to leave plenty of time
While the size of the business and the level of pensions experience will decide how long an employer will need to implement automatic enrolment, clients should err on the side of caution and leave more time, than less. The regulator recommends employers leave around 12 months to prepare. Leaving enough time will help avoid complications and the risk of non-compliance.
Employers, or payroll providers, should check whether their existing pension provider and payroll arrangements are suitable for automatic enrolment or if they need to make alternative plans. The regulator recommends employers have their provider and payroll plans in place six months before their staging date. With thousands of employers all seeking services and advice, it makes sense to start looking early. The experience of other employers shows it is imperative to test systems to avoid stressful last minute glitches and the risk of non-compliance.
Employers must assess all their staff
Employers will need to understand how to assess their workers for automatic enrolment. This may be an area where advisers can provide help, or establish whether the payroll and pension provider can offer assistance for them. Employers must also communicate to their workers about how automatic enrolment will affect them.
Five months after their staging date, employers must show they have complied with their automatic enrolment duties by completing a declaration of compliance (registration) with The Pensions Regulator. This is a statutory duty and each employer has a specific day by which to do this. If they fail to meet this deadline they could be liable for a £400 fine.
Ian Digby is industry liaison manager at The Pensions Regulator
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