22 pensions & auto enrolment Auto-enrolment
complacency will cost June saw the introduction of auto-enrolment for businesses with less than 30 employees – yet more than 1.2 million employers have yet to comply. The SME market is still struggling to get to grips with the new regime, explains David Brookes of HWB, one of the region‘s largest independent accountancy firms. But with daily penalties for non-compliance, no employer can afford to be complacent
prices available for SMEs than previously anticipated.
For the small and medium-sized businesses especially, it means an employer can not only ensure compliance, but also deliver a better value scheme for their workforce.
We‘ve been working with an FCA-regulated pensions adviser, to set up an auto-enrolment solution for our clients. It‘s easy to underestimate the lead time – the research and set-up process.
Designed as a way of encouraging people to invest in their own private pension provision, the auto-enrolment legislation has been rolled out with vocal and ongoing criticism over its clarity.
Complex guidelines and red tape will always be more of an issue for the SME business. They don‘t always have the resources to research new legislation, or the time to check complex details – they are busy running their businesses. That is now being evidenced by a lack of understanding and awareness of the new requirements.
Research just released by the provider, NOW: Pensions, has found that more than 350,000 businesses are totally unprepared for auto-enrolment. But it doesn‘t have to be difficult.
A year or so ago we thought that the large pension providers wouldn‘t want to be involved with auto-enrolment for the smaller end of the market but things seem to have changed since then. The larger insurance companies have stepped up to the line, allowing employers to set up schemes, no matter what size of workforce they employ. This means there are more solutions and more competitive
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It is important not to delay taking advice – we recommend that every employer prepares at least six months ahead of their ‘staging date‘, the date by which they must comply.
Auto-enrolment is controversial, it is complex and it does cost. But it‘s here to stay – and the penalities for non-compliance are severe. A professional adviser can streamline the process and ensure it‘s the best possible fit for your business, your staff and your budget.
At HWB we are always monitoring the marketplace and changes in legislation to ensure we are fully equipped to offer solutions that meet clients‘ needs. Auto- enrolment has evolved since its introduction in 2012 and we can expect pension providers and The Pensions Regulator to continue this process as we enter the new wave of compliance for smaller businesses.
Details: David Brookes 023-8046-1200
www.hwb-accountants.com
Clarity on employer auto-enrolment
duties for interns Maria Riccio, head of the pensions team at Penningtons Manches LLP, outlines the scope of employer auto-enrolment obligations when recruiting interns
UK requirements for the compulsory provision of workplace pensions for qualifying employees came into force in June 2012. The aim is to encourage more people to save for a comfortable living in retirement.
All UK employers will eventually have to ‘auto-enrol‘ their workers into a qualifying pension scheme where they meet the ‘age and earnings‘ criteria set out under the regulations. These requirements apply on a staggered basis, depending on the size of the employer‘s workforce as at April 1, 2012. Employers with less than 50 staff and new employers formed after April 1, 2012 will not have yet had to comply with the new pension requirements.
The employer duties apply to ‘workers‘ rather than those who are genuinely self-employed. To establish ‘worker‘ status, there must be a mutuality of obligations (one party provides work and the other party carries it out) and the worker must provide a personal service (so there is no option to send in a substitute).
Many employers currently offer student placements, which are also called ‘internships‘ and it is not uncommon for such placements to last up to a year in length. Interns would qualify as workers, as they are personal appointments.
Employers will struggle to sidestep the auto-enrolment requirements by dressing up internships as consultancy services. Interns are junior and there to learn the ropes rather than provide genuine consultancy services based on specialist skills and experience.
There is no special exemption for interns under the regulations and provided the person meets
THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – JULY/AUGUST 2015
the age and earnings criteria, auto-enrolment will apply. Even where interns do not meet the criteria for auto-enrolment, they may have rights to join an employer‘s scheme triggering the payment of mandatory employer contributions.
Employers can postpone auto- enrolment compliance for three months after their ‘staging date‘ and where a new employee starts work after their staging date. Employers may decide to structure their internships around these postponement periods to avoid having to comply with their auto-enrolment duties.
Some employers may prefer to stick to longer and more traditional internship periods. Many interns may decide to opt-out of auto-enrolment anyway, on the basis that they do not wish to earn pension benefits for such a short period of employment, especially where they feel a return to the employer for a permanent position (possibly after completion of their university course) is unlikely.
Details: Maria Riccio 01256-407100
maria.riccio@penningtons.co.uk www.penningtons.co.uk
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