What you think you know about auto enrolment.
Four Common misconceptions businesses have about auto enrolment. The recent change in legislation that means both employees and employers must contribute to our pensions has left many business owners and employees confused. On top of this, employers can face a fine up to £5000 per day for each day their auto enrolment system passes without operating correctly, making this process not only confusing, but very costly if you get it wrong!
1. It’s clear who to include and what I need to do for them.
On closer inspection, many employers have learnt that employees that they did not believe would be eligible for auto enrolment, in fact are. Examples include; self-employed contractors and employees working overseas.
Employers must ensure they fully assess who needs to be included in auto enrolment schemes as remedial action once an eligible employee has been discounted is both highly urgent and complex.
2. Businesses can easily manage this process themselves.
The auto enrolment legislation can be very complicated, this is particularly pertinent for businesses that have a variable or weekly work force. Not all pension and pay roll providers have the analytics to combat this quickly and correctly. It’s important to work closely with a provider to ensure the correct measures are in place to make sure your variable work force is covered.
3. The current system in place will work for auto enrolment
A combination of flexible contributions under auto enrolment coupled with the future cap on pension charges, mean that many providers have been seen to be altering their conditions, resulting in fines for employers, or a refusal to allow employers existing schemes to be utilised after their staging period. Fines may apply to employers who have exceeded their staging date. It’s important to work with experienced auto enrolment providers to ensure extra costs aren’t incurred.
4. Automatic enrolment means all our employees will have no choice but to enroll into a workplace pension.
Only employees who are considered ‘eligible job holders’ will be automatically enrolled into a work place pension. Individuals must be between the ages of 22 and the state pension age, usually work in the UK, and earn above the minimum to be considered an ‘eligible job holder’.
Despite meeting these conditions, employees may still opt out of their workplace pension, there are no imposed contributions from there on. These employees must be assessed every three years for eligibility and re-enrolled if they are still categorised as eligible job-holders.
Do you know everything you should about auto enrolment?
Ernest Grant’s auto enrolment service can help your business do just that – ensure your auto enrolment schemes are correctly in place to avoid unnecessary fines.