How the changes will affect you as an employer.
Starting from 1st October 2012:
- Employers will be required by law to enrol tax paying employees aged over 22 years into a qualifying pension scheme and contribute a minimum of 3% of earnings. The government’s ‘NEST’ (National Employers Savings Trust) pension is just one of the options available. Visit Nestpensions for further details.
- No employers will be exempt, regardless of size
- Any staff who choose to opt out must be enrolled again into the scheme by the employer every 3 years
- Existing non qualifying staff must be enrolled once their age or earnings make them eligible
- Employers cannot give their staff advice or encourage or assist with opting out
- The employer must register their chosen pension with The Pension Regulator and certify their contributions
- The employer must keep records for a minimum of 6 years.
- Businesses will be judged by their existing staff and potential recruits by the quality of their pension scheme.
- ‘NEST’ will not allow transfers in, the funds available will be limited, contributions capped at £4,400 (2012-2013), higher initial charges will apply and the employer will have to handle all the record keeping, data submission and administration. Not necessarily best for your company or your staff.
What if employers choose not to act
Employers can receive a criminal record in addition to the following fines if they choose to ignore their obligations under the new law.
An initial one off £400 fine to the employer for non compliance can be followed by:
- 1-4 Employees - £50 fine per day
- 5-49 Employees - £500 fine per day
- 50-249 Employees - £2,500 fine per day
- 250-499 Employees - £5,000 fine per day
- 500+ Employees - £10,000 fine per day
An Abacus pension adviser can guide you through these changes and help you set up a scheme that best suits you and your staff and keeps you in control of your company benefits package while ensuring the extra cost to the business is mitigated wherever possible.
Abacus can also supply you with a FREE payroll management system that will help you meet your obligations under the new law. Contact us for information on this system or for any of your workplace pension needs.