Submitted by Sestini And Co
| on Mon, 12/07/2015 - 7:15 | In Pensions
The deadline for auto-enrolment is fast-approaching, having already started for the largest employers, and with even the smallest employers required to be part of the Workplace Pension Scheme by 2019.
The government is spending £8.5 million on an advertising campaign with the aim of changing “the country’s perception of pensions in the workplace”. The campaign features a brightly coloured monster named ‘Workie’ and will run on radio, TV, print, online and outdoor advertising.
Workers between 22 and the State Pension age, who earn at least £10,000 a year or £833 per month and work in the UK must be enrolled in the scheme. Workers do have the right to opt out of the scheme but if they do so, employers are obliged to re-enrol staff into the scheme approximately every three years.
Impact on company finances
Employers’ contributions are allowed as a deduction against the company profits for corporation tax purposes and there’s also the opportunity for employees to sacrifice salary or bonus if their employer pays the equivalent amount into the Workplace Pension, reducing employer NI contributions as well as employee NI and income tax.
The minimum contribution level is initially 2% of earnings: 0.8% from the employee, 1% from the employer and 0.2% tax relief, however this increases in later years.
From April 2018 to March 2019 the minimum is 5%, from April 2019 8% (4% from the employee, 3% from the employer and 1% tax relief). These dates were initially planned to be October 2017 and October 2018 but were pushed back by six months in the Autumn Statement.
Who will need to enrol staff into a pension scheme?
Automatic enrolment applies to all businesses with at least one member of staff. And if you’re an individual and just employ one person, such as a nanny or a carer and you’re responsible for deducting income tax and National Insurance contributions from their wages, you will still need a pension scheme.
If you fail to comply, the Pensions Regulator can apply fixed and daily penalty notices.
An estimated 9 million workers will be part of the auto-enrolment process by completion with 5.4 million already enrolled via around 61,000 employers.
The scheme is being introduced in a phased way, with the date allocated to your company being set in 2012. You can find a reminder of your staging date by entering your PAYE reference at this website: http://www.thepensionsregulator.gov.uk/employers/staging-date.aspx
Organisations which don’t pay their staff through a PAYE scheme all share the staging date of 1 April 2017.
Which pension scheme applies?
There are a number of options for choosing the pension scheme for your employees. You can find a scheme yourself, or choose one via an intermediary such as a financial adviser. You may be able to use your existing scheme, if it meets the auto enrolment rules.
If you’re unsure of your obligations or would like to check the impact of auto-enrolment on your business, call us on 01761 241 861 or email us today. We will be pleased to advise you or to invite you into our offices in Paulton, near Bristol and Bath, for a consultation.