22:49
Faizan
Auto Enrolment is about more than just introducing a pension scheme by a specific date. Employers are responsible for a wide range of duties, many of which must be completed prior to staging. In fact, The Pensions Regulator recommends that employers start preparing for Auto Enrolment at least twelve months in advance of their staging date. The following seven steps are part of a proven strategy and should be completed by employers in advance of their staging date to ensure a successful launch.
1. Create a Plan
The first step is to pull a team together who will be responsible for managing the Auto Enrolment project. The team can then review the employer's current situation and Auto Enrolment responsibilities in detail and use this information to develop a project plan. Using a clearly defined plan will help to ensure that everything has been covered and that each member of the project team understands their individual responsibilities to ensure the project is delivered on time.
2. Assess the Workforce
The Pensions Regulator has introduced three categories of worker which are based on employee's age and earnings. The employer has a different set of duties for each category of worker, so it's essential to assess the entire workforce as early as possible in order to determine the employer's responsibilities towards each employee.
3. Calculate Costs
The main cost to the business is the employer contributions. The standard contribution rate is 8% of an employee's qualifying earnings and is made up from a 3% employer contribution, a 4% employee contribution and 1% tax relief. There are, however, a variety of options in the rules which, if used correctly, can significantly reduce and spread out the cost of Auto Enrolment. Carrying out a series of calculations is essential to ensure the scheme is set up in the most cost-effective manner.
4. Scheme Design
There are many options available when choosing an Auto Enrolment Scheme. One of the biggest mistakes companies make is to simply assume that an existing scheme will be suitable and wait until the last-minute before taking action, only to find that the scheme doesn't meet the new Auto Enrolment criteria. There are also significant differences in charges and features between schemes. Even if an existing scheme does meet the Auto Enrolment criteria, it's always worth searching the market for a better alternative.
5. Review of Internal Processes
Auto Enrolment has a big impact on an employer's internal processes. The employer must ensure that its payroll and HR systems are integrated with the systems of the pension provider. The internal infrastructure must be able to cope with managing ongoing responsibilities such as dealing with new starters and employees who choose to opt in or out of the scheme. Thinking about these issues in advance will help to ensure a successful launch and a seamless delivery.
6. Employee Communications
The employer must provide relevant communications to each of the different categories of worker to ensure they fully understand the implications of Auto Enrolment. The Pensions Regulator has released strict guidelines around the content of communications and timing of delivery. A well planned communications strategy will not only ensure compliance with The Pensions Regulator, but will also raise awareness amongst employees of the benefits of saving into a workplace pension.
7. Test and Implement
This final step may seem obvious but it is so often overlooked. All systems and processes should be tested thoroughly so that any issues can be identified and rectified prior to launch. Taking the time to complete this exercise will ensure both efficient delivery and compliance with The Pensions Regulator.
Conclusion
Auto Enrolment is an extremely time-consuming process and is as much about project management and specialist knowledge as it is about pensions.
1. Create a Plan
The first step is to pull a team together who will be responsible for managing the Auto Enrolment project. The team can then review the employer's current situation and Auto Enrolment responsibilities in detail and use this information to develop a project plan. Using a clearly defined plan will help to ensure that everything has been covered and that each member of the project team understands their individual responsibilities to ensure the project is delivered on time.
2. Assess the Workforce
The Pensions Regulator has introduced three categories of worker which are based on employee's age and earnings. The employer has a different set of duties for each category of worker, so it's essential to assess the entire workforce as early as possible in order to determine the employer's responsibilities towards each employee.
3. Calculate Costs
The main cost to the business is the employer contributions. The standard contribution rate is 8% of an employee's qualifying earnings and is made up from a 3% employer contribution, a 4% employee contribution and 1% tax relief. There are, however, a variety of options in the rules which, if used correctly, can significantly reduce and spread out the cost of Auto Enrolment. Carrying out a series of calculations is essential to ensure the scheme is set up in the most cost-effective manner.
4. Scheme Design
There are many options available when choosing an Auto Enrolment Scheme. One of the biggest mistakes companies make is to simply assume that an existing scheme will be suitable and wait until the last-minute before taking action, only to find that the scheme doesn't meet the new Auto Enrolment criteria. There are also significant differences in charges and features between schemes. Even if an existing scheme does meet the Auto Enrolment criteria, it's always worth searching the market for a better alternative.
5. Review of Internal Processes
Auto Enrolment has a big impact on an employer's internal processes. The employer must ensure that its payroll and HR systems are integrated with the systems of the pension provider. The internal infrastructure must be able to cope with managing ongoing responsibilities such as dealing with new starters and employees who choose to opt in or out of the scheme. Thinking about these issues in advance will help to ensure a successful launch and a seamless delivery.
6. Employee Communications
The employer must provide relevant communications to each of the different categories of worker to ensure they fully understand the implications of Auto Enrolment. The Pensions Regulator has released strict guidelines around the content of communications and timing of delivery. A well planned communications strategy will not only ensure compliance with The Pensions Regulator, but will also raise awareness amongst employees of the benefits of saving into a workplace pension.
7. Test and Implement
This final step may seem obvious but it is so often overlooked. All systems and processes should be tested thoroughly so that any issues can be identified and rectified prior to launch. Taking the time to complete this exercise will ensure both efficient delivery and compliance with The Pensions Regulator.
Conclusion
Auto Enrolment is an extremely time-consuming process and is as much about project management and specialist knowledge as it is about pensions.
