What happens if you don’t comply with Auto Enrolment regulations?
Last week we took you through the requirements of Auto Enrolment rules and what you need to do by staging date. This week we will take a brief look at the penalties for non-compliance of these new rules!
There are strict regulations preventing employers from using prohibited recruitment policies (such as favouring candidates who don’t join the pension scheme) or using incentives (such as cash) as an alternative to pension membership.
These practices are banned and carry heavy fines.
As an employer, you must:
- Auto enrol and re-enrol eligible employees
- Deduct payments
- Register their pension scheme
- Provide information to eligible and non-eligible job holders
- Provide information to scheme provider
- Process opt outs and make refunds
- Keep appropriate records
And must not:
- Offer advice
- Discourage employees from joining the scheme
- Give job holders opt out forms
- Use “prohibited recruitment conduct”
There are harsh penalties for non-compliance. It starts with a formal warning, then a fixed penalty and could result in a daily penalty rate on a sliding scale based on the number of employees you have. You have been warned!
If you have any questions about Auto-Enrolment and the points discussed in this article, call us on 01279 654696 or email us at email@example.com
We look forward to hearing from you.
Posted December 13, 2013
“I’m In ” adverts – How it affects you
You may have seen the ‘I’m In’ adverts for pension auto enrolment featuring Lord Sugar’s aides – Nick and Karren but many businesses are not ready for Auto-Enrolment! We are here to demystify the rules for you!
Auto enrolment was introduced back in 2012 and employers have new legal duties to automatically enrol members of staff into a pension scheme and make contributions into their pensions.
Many large companies will have already had to implement the changes but most small to medium sized businesses (SMEs) will be affected from next year onwards.
Some companies might have already received a letter from the Pensions Regulator telling them about their Staging Date – the date from which companies must comply with the new regulations. The staging date is based on the total number of people a firm has on their PAYE scheme.
What businesses need to do.
· Identify those workers in your organisation who are ‘eligible jobholders’.
· Automatically enrol them into a qualifying workplace pension scheme.
· Communicate with all workers and provide information appropriate to their situation.
· Pay contributions of a total of 8% of a band of earnings of which 3% must come from the employer (this is the full rate applicable from October 2018 – a lower rate applies before this).
· You must repeat this process each ‘pay reference period’ and ensure that all eligible jobholders are automatically enrolled at the first opportunity, that the correct contributions are collected and paid for each employee.
· You must register with the Pensions Regulator at staging (& at regular intervals thereafter) providing confirmation of the actions taken.
· You must ensure that you keep accurate records of everything you do each pay reference period so that the Pensions Regulator inspectors may see that you have complied with the legislation.
Can an eligible jobholder opt out?
Yes, but an eligible jobholder must be automatically enrolled before they can choose to opt out of the pension scheme.
Automatic enrolment is achieved when the employer has given information about the eligible jobholder to the pension scheme, and the eligible jobholder has received the enrolment information from their employer and has become an active member of the pension scheme.
The employer cannot provide the form to opt out – it must come from your pension company or adviser. Employees will have one month to opt out after receiving notification they have been auto-enrolled and may receive a full refund of their contributions. They must however, be auto-enrolled once again in 3 years-time (from the staging date) where they may or may not choose to repeat the opting out process.
I’m only a small business, will it affect me?
This affects any employer with one or more employees.
How can I find out my staging date?
Why has auto enrolment been introduced?
It’s been introduced to support an ‘ageing population’ (the proportion of the total population which is over retirement age is increasing whilst the proportion of working age remains static).
Next week we will go through what you must and must not do in relation to Auto Enrolment. Stay tuned!
In the meantime, if you have any questions about Auto Enrolment, get in touch. Email us at firstname.lastname@example.org
or call us at 01279 654696.
Posted December 3, 2013
Are your paying enough?
Did you know that national minimum wage went up? Are you in compliance with the new rates?
Check our quick guide below and make sure you are paying your staff enough!
for workers aged 21 years or more: £6.31 per hour
for workers aged 18 to 20 inclusive: £5.03 per hour
for workers aged under 18 (but above compulsory school age): £3.72 per hour
for apprentices aged under 19: £2.68 per hour
for apprentices aged 19 and over, but in the first year of their apprenticeship: £2.68 per hour
Posted November 6, 2013
Auto Enrolment – Getting Started
Are you an employer?
Have you heard about Auto Enrolment? Know what your Staging Date is?
Do you want to find out what you need to do?
Follow our blog over the next few months as we help you demystify what your obligations are.
For now, we will give you a general overview on Auto Enrolment, Staging Date and The Pensions Regulator.
- Since 1st October last year, depending on the company’s PAYE reference, employers have had to start thinking about auto-enrolling eligible employees and make mandatory employer contributions into a qualifying workplace pension scheme.
- Each employer will be given a date from which they must auto enrol, known as their “staging date” by the Pensions Regulator.
- Employers will have to decide if they will be using a defined-contribution pension scheme or the National Employment Savings Trust (Nest) as their qualifying pension scheme. It’s important to get professional advice to understand what these options involve. Getting it wrong can be problematic and expensive.
- From your Staging Date, employers must auto-enrol eligible employees in a pension scheme when they reach the income tax threshold but contributions will kick in only from the employee threshold for national insurance contributions.
- As an employer, you can operate a three-month postponement window for all employees (newly eligible existing employees or new employees), so that employees on short-term contracts do not need to be auto-enrolled in a pension scheme, but remember, they can opt in voluntarily during the postponement period.
- Your Staging Date will depend on the number of employees you have in your PAYE scheme on 1 April 2012. You can find out your Staging Date by visiting The Pensions Regulator website here . You will need to have your Employer PAYE reference number to hand.
- The larger the employer’s PAYE scheme, the earlier the staging date.
As a Payroll & Human Resources Specialist, we can help you navigate the new requirements. Our sister company Bridgehead have specialist advisers who offer help and advice on pension schemes. If you have any questions about Auto Enrolment, please email us at email@example.com or call us at 01279 654696.
Posted September 3, 2013
Real Time Information – Payroll is changing…
From 6 April 2013, employers will have to report payroll information to HMRC in real time every time payroll is run. This will replace the current system of reporting at year-end.
This new system is known as Real Time Information (RTI).
What is RTI?
RTI is a new system for reporting tax, National Insurance Contributions and other details to HMRC. As an employer, you are responsible for all tax deductions and calculations but
instead of submitting this data once a year to HMRC, you will be required to return year to date figures at the same time as payment is made to your employees.
Will I be affected by RTI?
All companies (with a few exceptions) with up to 5,000 employees will need to start making RTI submissions from 6 April 2013. Larger employers have until October 2013 to comply with the new rules.
Why is RTI being put in place?
It is being introduced to keep pace with modern working patterns and to provide HMRC with more up to date information ensuring deductions for tax, National Insurance and student loans are more accurate.
What do I need to do?
The most important step is to make sure your payroll provider can comply with RTI as this will most likely affect you from April 2013.
Top 5 Tips
- Ensure all your employee information (name, address, gender, date of birth, national insurance number…) as well as your PAYE reference and Accounts Office reference are correct
- No more annual payroll returns. The system of reporting information by tax year-end will stop.
- RTI means less paperwork when you have joiners & leavers.
- You will have to submit a Full Payment Submission on or before each payday. Larger employers will have to submit an Employee Alignment Submission.
- Harper Morris can help with fully compliant RTI payroll services tailored to your needs.
Posted April 23, 2013