CEO of NOW: Pensions, Morten Nilsson explains how for small manufacturing firms, auto enrolment is looming large on the horizon.
Starting in June, businesses with fewer than 30 staff will be captured by the legislation and in 2016, over half a million small firms will have to begin offering their employees a pension scheme.
Auto enrolment isn’t without complexity and planning ahead shouldn’t be underestimated.
The Pensions Regulator writes to all firms 12 months in advance of their staging date – the deadline by which employers need to have a scheme in place and be ready to enrol employees – to tell them what they need to do.
An employer’s staging date is assigned to their PAYE number and, in general, employers with more employees in their PAYE schemes will have the earliest staging dates and the smallest organisations will have the latest staging dates.
If employers are unsure when their staging date is they can check their staging date by visiting www.thepensionsregulator.gov.uk and inputting their PAYE reference.
While a little planning can certainly go a long way, research NOW: Pensions conducted with 269 small and medium sized companies earlier this year revealed nearly a quarter of manufacturing firms haven’t given any thought to how they’ll go about finding a provider for auto enrolment, while 22% intend to use their existing pension provider.
Firms planning to rely on their existing provider for auto enrolment should speak to them early on to ensure that the scheme qualifies and to confirm that they are willing to extend it to all employees on the same terms.
Companies with outsourced payroll arrangements should also contact their payroll provider as soon as possible to find out what auto enrolment support they offer and which pension providers they work with. By selecting a pension provider that is already integrated with their payroll provider, firms can avoid unnecessary hassle and expense. So making enquiries early on is time well spent.
For small firms introducing a workplace pension for the first time, it might pay to seek some support. Of the manufacturing firms NOW: Pensions surveyed, 19% intend to enlist help from their accountant while 12% are content to research the market themselves.
Approaching auto enrolment can feel daunting and there are a lot of things to consider, particularly for firms that have never set up a pension scheme before. But a little planning can go a long way and taking a thorough approach will certainly pay dividends.
If you would like more information about NOW: Pensions and how to set up a pension scheme, click here.
Alternatively you can contact our business development team on 0333 33 22 025.