Workplace Pension Schemes and Auto-Enrolment

Around 20,000 charities will have to put a Workplace Pension scheme in place by April 2017.

There is a perception that arranging a Workplace Pension scheme is simply a case of contacting a pension provider and putting a scheme in place. However, in reality that is often not the case. Under the new rules, employers will have to enrol their workers in to a qualifying Workplace Pension scheme without their say so if they earn more than £833 a month and are aged between 22 and state pension age.

Employers also have a legal responsibility to let existing and future workers know how Workplace Pensions affect them, even if they’re not automatically enrolled into the Workplace Pension scheme.

Therefore, employers must inform their workers in writing about:

  • Whether they’re being automatically enrolled or have the right to opt in    Visit Autoenrolment pages
  • Whether they’re entitled to receive pension contributions from you
  • How much they’ll need to contribute themselves
  • The scheme you’ve chosen as an employer
  • When they’ll be affected.

Simply put, Workplace Pension legislation removes all the barriers that have prevented workers from joining a pension scheme in the past.

To meet the new rules the Workplace Pension scheme needs to be able to accept members by auto enrolment and have annual management charges of no more than 0.75%. In addition, the employer needs to decide how much will go into the scheme, ensure the amounts meet minimum criteria and the scheme itself must have a default position about how those contributions are invested.
 
Employers must finally complete a ‘Declaration of Compliance’ with The Pensions Regulator on how they have met their duties.  Getting Workplace Pensions wrong can be costly. The Pensions Regulator can issue fixed charges of £400 and daily penalties of ranging from £50 - £10,000 a day if an employer does not comply.
 
In a lot of ways, once the scheme is in place the day to day running of a Workplace Pension scheme will largely become part of the payroll process. Employers need to ensure that their Payroll and HR systems can handle the new routines. Employers also need to consider their increased staff costs as the total minimum levels of contributions will increase from 2% to 8% over the next 3 years which could have a detrimental impact on cash flows.

It is important to note that in April 2017, over 570,000 employers will face the same challenges of organising a Workplace Pension scheme.  Therefore, we recommend that you put a plan in place as soon as possible to ensure that you are not competing with other employers for the support you need.

For more information, please visit our Auto-Enrolment Services pages where you will find detailed information and guidance.  Alternatively, please contact Ken Davies, Director of Payroll or Joanne Nieman, Payroll Manager on 0151 423 7500 or via e-mail autoenrolment@mitchellcharlesworth.co.uk 

Registered to carry on audit work in the UK and Ireland by the Institute of Chartered Accountants in England and Wales and authorised and regulated by the Financial Conduct Authority for investment business