By now you’re sure to be aware that it’s becoming compulsory for companies of all sizes to offer their employees a workplace pension scheme by 2018. Run through automatic enrolment, and staged in line with company size, there are some significant penalties if you miss your staging date and fail to set up and run an appropriate plan.
You can check your staging date by visiting the Pensions Regulator www.thepensionsregulator.gov.uk/employers/staging-date.aspx and providing the last digits of your PAYE reference.
The requirement to offer a workplace pension covers full and part-time staff, all of those not currently in a suitable workplace scheme, those who are 22 and over but under statutory retirement age, those who earn more than £10,000 (in the 2015-16 tax year), and those who work in the UK. If your employees meet these criteria then you must make a scheme available to them. And be mindful that even agency workers on short-term contracts, and those on maternity, paternity, adoption, or carers leave should be covered. Plus, those employees who earn more than £5,824 but less than £10,000 (2015-16 tax year) can ask to be enrolled and you will then be responsible for making all relevant contributions.
But what will it all cost you? And have you prepared for the additional expense? Currently you must pay at least 1% of an employee’s ‘qualifying earnings’ into their workplace pension, and this figure is set to rise to 3% in 2019 if approved by parliament. ‘Qualifying earnings’ can be worked out as either the amount an employee earns before tax between £5,824 and £42,385, or their entire salary before tax.