Partner Article

Workplace Pension Law - Q&A

Workplace pension law has changed and will affect every business in the North East with one employee or more, but it needn’t cause sleepless nights for employers says Tait Walker pensions specialist Ian Marsh.

“From October 2012, every UK employer either already has, or will soon have a responsibility to support their staff in saving towards retirement. If you are an employer with one employee or more, then it will be your legal duty to automatically enrol your ‘entitled workers’ into a qualifying workplace pension scheme and make contributions towards it from a specified date for your business, known as a Staging Date.

This could present some challenges for a number of businesses, but it doesn’t have to be a headache. There are several ways to comply with the new rules which the team of experts at Tait Walker can help with.“

Ian answers some key employer questions…..

Q: What if I haven’t done anything about Auto Enrolment yet?

A: You need to find out when your Staging Date is and I recommend that you allow yourself at least 12 months to fully plan the implementation of your pension scheme.

Q: What’s a staging date?

A: This is the date at which your company will need to comply with the new rules. It’s based on the number of employees that your company had as of 1st April 2012 and your company PAYE reference number. If you have more than one PAYE reference number then it is the part of the business with the most employees that is used to calculate your Staging Date.

Q: How much could this cost my business?

A: This is the big unknown of the new rules. How many of your staff will want to join a pension scheme? How much will you, the employer, be willing to contribute? What definition will you apply to pensionable pay – do you just use basic pay or do you add in other things like overtime & bonuses? You need to budget for the ‘worst case scenario’ – factor in non-basic earnings and assume that all eligible employees join!

Q: What will happen if I don’t comply with the staging dates in time?

A: There are very significant fines which will be levied. It won’t be like the previous Stakeholder Pension rules that were very rarely enforced so it is highly recommended that employers put a plan in place immediately. The level of fine depends on the size of your company.

Number of workers…………….Penalties per day

1-4 ……………………………………………£50

5-49………………………………………….£500

50 – 249…………………………………..£2,500

250 – 499………………………………..£5,000

500+……………………………………….£10,000

With over 200 employer duties to comply with its best to seek independent advice to make sure you get the best scheme in place for your business and minimise the cost as much as possible.

Tait Walker advise a number of North East companies on workplace pensions – for further information on how Ian and his team of experts might be able to help, contact 0191 285 0321 or email ian.marsh@taitwalker.co.uk.

This was posted in Bdaily's Members' News section by Ian Marsh .