There are a number of key considerations when enrolling your employees. The AF Auto-enrolment Service can take care of the process for you and can be tailored to the level of support you need.
- Do not leave it too late – start planning at least 6-12 months ahead of your staging date
The auto-enrolment ‘to-do’ list will take some time to complete so shouldn’t be left to the last minute. Depending on the joining method selected, enrolling employees to the pension scheme could involve changes to their contracts of employment, and this would require a three month consultation period. - Understand your key dates – staging date, pay reference period and payroll cut off
It’s crucial you not only understand when your staging date is, but also any key company dates such as the pay reference period and payroll cut off. Documenting these dates and then overlaying the new dates when actions need to be completed, as a result of pension reform legislation, will help gauge the impact on the business. - Quality of data is key – It’s easy to underestimate the complexity of the data required; data for employee eligibility assessment, joining, contributions and opt outs. It takes a significant amount of time to do this within payroll cycles and the frequency that this data is needed, also adds a layer of complexity.
- Choice of contribution basis – Your chosen scheme must meet a quality standard, based around a minimum level of benefit or contribution, so you will need to start budgeting for any extra costs. There is more than one acceptable contribution basis and they can be mixed and matched across the workforce to suit different reward mechanisms or pay patterns. The contribution basis and definition of earnings can be chosen to suit the business, providing they pass one of four tests.
- Method of contribution – Salary exchange should also be considered as this can offer significant cost saving benefits. However, where salary exchange is being used, this decision should be made prior to the scheme staging otherwise it can cause additional administration.
- Existing joining methods may be fit for purpose where an existing scheme is in place – Many employers believe they will need to change the way they currently join employees to their pension scheme. This is not always the case. Existing methods and processes for joining may already be suitable but it’s likely to mean changing processes, and potentially employment contracts, to meet the new legal requirements.
- Use waiting periods to fit your business, but you cannot delay statutory communications to your staff – The majority of employers have used waiting periods aligned with payroll so employees join on the first day of the pay reference period. This avoids having to calculate, explain and manage part payments, but it is also possible to build in a waiting period to avoid one-off events such as bonus payments or seasonal increases. Remember that you can delay assessment and auto-enrolment, you cannot delay the statutory communications to your employees.
- Communicate with employees early – Engaging with employees and clearly communicating the changes in advance of Auto-enrolment will make sure that when it happens, employees understand why money is being deducted from their pay. This will also ensure they appreciate the value the employer contribution is adding while reducing employee questions.
- Review existing default investment funds – You have a regulatory responsibility to make sure the Auto-enrolment default investment option is suitable for those employees who will be enrolled to the scheme. Existing investment solutions may not be appropriate. You also have a responsibility to have an on-going investment governance framework in place.
- Remember to register with the Pensions Regulator within four months of the staging date (five months from April 2014) – You must register your scheme with the Pensions Regulator within four months of the staging date. Details must be given of your qualifying workplace pension scheme and how you have gone about it.
For more information about the Affinity Auto-enrolment Service, initially contact Richard Hastings on 01603 881874 or email richard.hastings@angliafarmers.co.uk.