Managing Your Cash Flow
Still not sorted auto-enrolment in your business? Here’s what to do today
3 min read
29 January 2014
In the next 12 months 40,000 businesses in the UK will have to sign their employees up to a pension scheme. The chances are that your business will be one of them. If you haven’t got around to thinking about it yet, its time you did. Here are five tips to help you plan.
1. Don’t panic… but check your deadline NOW
For the majority of businesses with under 250 employees – particularly those with 50 employees or under – you still have time on your side to make sure you meet the new legal requirement to enrol very qualifying employee into an eligible pension. Check your deadline today on the website of Pensions Regulator.
2. Get advice: you WILL need it, so get it early on
No company will be able to make auto-enrolment happen without some external advice about the process and compliance of your proposed pension scheme. There will be high demand for this advice and the later you leave it, the more you can expect to pay. Start the process of finding an advisor early on and build the costs into the budget.
3. Get a plan and work ahead of your deadline
Pensions auto-enrolment is a substantial project for every business. You will need to dedicate management time to planning, project managing and monitoring the process from beginning to end. If followed properly the process can be straightforward but areas like data gathering, finding the right advisers and communications can take longer than you anticipate. A number of the pension providers are already starting to buckle under the pressure. Build wriggle room into your plans so you can meet your pensions staging date with room to spare.
4. Costs – don’t underbudget
Auto-enrolment will cost more than you think. The lesson from employers who have gone through this already is you shouldn’t expect employees to opt out so you need to anticipate making contributions for all qualifying employees. Equally don’t assume the minimum contribution will be right for your business. There will be a trade-off between what you have to pay as a minimum, what your competitors are doing and what your employees expect.
5. Compliance and governance – get it right from the start
Auto-enrolment isn’t simply about providing a pension, it is about ensuring your employees have access to a qualifying scheme which you have taken steps to ensure meets their needs. The Pensions Regulator expects your business to comply with every element of auto-enrolment, from the choice of pension scheme, to staff communication and the management and gathering of data. Make sure you understand all of your responsibilities before you start the project – the regulator will take action on those who take short-cuts.
Rolling out your auto-enrolment scheme will involve more people than you think. So the last piece of advice is to pick someone who you think can work with and influence payroll, HR, finance, your accountants, your management team and, of course, your employees. Effective communication will be critical to success.
Andy Philpott is sales and marketing director at Edenred, an Employee Benefits.