Staging in 2016? 7 Auto Enrolment Top Tips

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1 Staging in 2016? 7 Auto Enrolment Top Tips Seven key auto enrolment tips to help ensure your business is compliant in 2016

2 Introduction Auto enrolment can be daunting for small businesses for a number of reasons. From the financial implications to the changes in legislation and your responsibilities, there are many things to consider. Recently, The Pensions Regulator announced that over 63% of all noncompliance fines given out since the workplace pension reforms began in October 2012, were given out between October-December This is interesting as this would indicate that businesses with fewer than 40 employees were the recipients of the fines, possibly highlighting a lack of auto enrolment awareness amongst small and medium-sized businesses (SMEs). We ve put together seven of our top recommendations for auto enrolment. These are the core pieces of information which could make your businesses auto enrolment process run more smoothly and hopefully avoid some nasty fines for non-compliance. Please note that this guide is for guidance only, and is not definitive advice for auto enrolment. For advice on staging for auto enrolment, please contact The Pensions Regulator.

3 1. Know your staging dates The first thing to know is when your business actually stages. This is the date on which your business and employees need to begin contributing to a workplace pension scheme. You don t need to be an expert in auto enrolment, but by knowing your staging date and preparing in enough time, you can help ensure that things run smoothly on the date your company begins staging. The staging dates for 2016 only are shown below. PAYE scheme size or reference Staging date numbers 02-04, C1-C9, D1-D9, CA-CZ or DA-DZ numbers , E1-E9 or EA-EZ numbers 01, 08-11, F1-F9, G1-G9, FA- FZ or GA-GZ numbers 12-16, 3A-3Z, H1-H9 or HA- HZ numbers I1-I9 or IA-IZ numbers 17-22, 4A-4Z, J1-J9 or JA-JZ 1 January February March April May June 2016 Fewer than 30 with the last 2 characters in their PAYE reference numbers 23-29, 5A-5Z, K1-K9 or KA-KZ Fewer than 30 with the last 2 characters in their PAYE reference numbers 30-37, 6A-6Z, L1-L9 or LA- LZ Fewer than 30 with the last 2 characters in their PAYE reference numbers N1-N9 or NA-NZ Fewer than 30 with the last 2 characters in their PAYE reference numbers 38-46, 7A-7Z, O1-O9 or OA-OZ Fewer than 30 with the last 2 characters in their PAYE reference numbers 47-57, 8A-8Z, Q1-Q9, R1- R9, S1-S9, T1-T9, QA-QZ, RA-RZ, SA-SZ or TA-TZ 1 July 2016 You can also check your business s specific staging date on The Pensions Regulator website. 1 August September October November 2016

4 2. Find the right Pension Provider 1. Don t assume that your current pension is a qualifying workplace pension There are many pension providers out there, and making sure that your business is with the right provider is one of the most important decisions you will make where auto enrolment is concerned. Having the right type of pension is also important and there are also a few other things to consider, for example: 2. How many employees your business has Depending on how many employees are enrolled in an auto enrolment scheme has an effect on the annual charges your business will face. Pension providers often require a scheme cost (sometimes referred to as an annual charge) which whilst relatively low, can still add up depending on the size of your business. 3. The joining charges Some pension providers are now reaching peak capacity, and because of this, it s becoming more and more common to see providers ask for joining fees from the employers themselves. For example, a provider could have a 500 joining fee for enrolling your employees with them. 4. Staging date Your staging date could influence more than you think. The aforementioned joining charges could rise depending on how many businesses stage before you, and this could have an effect on potential joining charges your business may have to pay. As well as this, some pension providers may actually refuse new business as they ve reached capacity due to the amount of businesses who ve staged before you.

5 3. Choose the right business software The Pensions Regulator recommends that employers use payroll software that caters for their auto enrolment duties. The easiest way to help ensure compliance with auto enrolment is by making sure that your payroll software is capable of handling the various calculations and deductions each pay period. KashFlow are proud to offer the KashFlow AE Suite. Developed through close relationships with both pensions providers and The Pensions Regulator, as well as customer feedback, the solution works within your payroll to perform the calculations for each pay period automatically. Additionally, the package automatically creates an audit trail of documentation, and even prepares s to The Pensions Regulator on your behalf, so all you need to do is check over them and click send to help ensure compliance. By having the right software in place your business can streamline auto enrolment to a fully automatic process. The right software can save time, help ensure compliance and avoid fines, and also manage the communication aspect of auto enrolment to assist with audits.

6 4. Assess your workforce Do this in advance to help understand the costs of pension contributions you will need to make for your workforce. Assessing your workforce to see who is eligible to be enrolled is also an important step towards auto enrolment compliance. Employees who will automatically be enrolled into a workplace pension scheme are referred to as eligible jobholders. In order to be an eligible jobholder, your employee must be: Aged between 22 and the State Pension Age Based mainly in the UK Earning over 10,000 per year Employees who meet the above criteria must be automatically enrolled into a pension scheme as soon as your business reaches its staging date. At this point, contributions must begin towards a pension for your employee both from their own wages, and also from the employer themselves. Also, workers who do not meet the above criteria are still able to be enrolled into a scheme if they wish; they just have to optin to join one.

7 5. Don t forget to complete your declaration of compliance Once your staging date has been reached and your workplace pension scheme is up and running, there are three things you then need to do: 1. Inform The Pensions Regulator that you have now fulfilled your duties and have started your workplace pension scheme. You can do this by registering your information on The Pension Regulator s website. 2. Keep specific records about your enrolled workers, their status within your business s scheme, payment contributions of both the employee and employer, as well as information about the scheme itself. This is largely for audit purposes and can help avoid fines from The Pensions Regulator if kept up-to-date. 3. Write to each staff member and explain how auto enrolment applies to them and explain their rights. This must be done in writing and within six weeks of your staging date, failure to do so can result in fines from The Pensions Regulator. The Pensions Regulator provide free letter temples to help with this, you can download them here. Alternatively the KashFlow AE Suite is able to print pre-prepared letter templates, completed with your employee details, straight from the package itself to save time.

8 6. Don t ignore the workplace pension Failure to comply with the workplace pensions reform could see The Pensions Regulator issue your business with a warning notice at first, before a fine is later issued due to further non-compliance. After this, The Pensions Regulator is within its rights to take your business to court if further non-compliance continues. The Pensions Regulator state that in cases where employers simply don t understand their responsibilities, they will work with them to ensure that the business becomes compliant as soon as possible. However, if they believe that a business is purposely avoiding auto enrolment, then they can take action. - 4,818 compliance warning notices have now been issued - 2,596 compliance warning notices issued between October 1st and December 31st ,594 fixed penalty notices have been issued to non-complying businesses in total since ,013 of these fixed penalty notices were issues between October 1st and December 31st 2015 Statutory notice The first thing The Pensions Regulator will do after identifying non-compliance is issue a statutory notice, this is where both parties identify where a problem lies; such as if the business is genuinely unaware their responsibilities or actively avoiding them. Penalty notice (fines) Further non-compliance can result in fines being handed out. A fixed penalty notice is set at 400 but The Pensions Regulator can escalate this and even add a daily noncompliance charge of anywhere from 50 to 10,000 depending on the number of employees that your business has. Court action The final action The Pensions Regulator will take is to prosecute your business for non-compliance through the courts. They are also able to confiscate goods and restrain assets during criminal investigations.

9 7. Speak to KashFlow for help We understand that the workplace pension reform can seem daunting, so to help make sure that auto enrolment goes as smoothly as possible for you business we offer a wide range of helpful resources. 1. We offer free bite-sized webinars on auto enrolment. Here you can get the basic information on staging for auto enrolment within a small business. 2. Additionally, we offer a mix of online, classroom-based, and on-site training to help you get to grips with auto enrolment legislation through our online store. 3. The KashFlow auto enrolment experts here are more than happy to arrange a one-to-one demonstration of KashFlow and the KashFlow AE Suite at a time and date to suit you. 4. We provide a comprehensive software solution in the KashFlow AE Suite and also provide software training to help configure your package.

10 7. About KashFlow KashFlow is award-winning, cloud based and simple accounting software, designed specifically to help small business owners make sense of their accounts. Jargon free and loved even by non-accountants, KashFlow s aim is to take away the stress of bookkeeping and accounting, giving small businesses more time focus on what they do best. KashFlow customers can easily generate quotes, create fully customisable invoices, balance their books and keep track of their business spend, all with ease and in record time. Being fully cloud based, customers can also take the minutes required to control their accounting wherever they are. The KashFlow HMRC accredited payroll software processes your company s pay, delivers your employees payslips and automatically files your RTI submissions online, and on time. To see how KashFlow can help your business thrive in 2016, get in touch today. Call us: (Option 1) Visit us: kashflow.com Follow us on Like us on Facebook: facebook.com/kashflowsoftware/ Follow us on Linkedin: linkedin.com/company/kashflow Add us on Google+: plus.google.com/+kashflow For further information and learning resources on auto enrolment visit the KashFlow auto enrolment hub: kashflow.com/auto-enrolment/