22/04/2015

By Rich Preece, VP and Country Manager, Intuit UK


Hundreds of thousands of small businesses are set to go through their Auto-enrolment staging date over the next 12 months. Even if you’re not one of them yet, it’s important for all small business owners to understand what Auto-enrolment is and start planning for the future.

Auto-enrolment, also referred to as workplace pensions, is a Government initiative that requires businesses in the UK to automatically enrol employees into a workplace pension, which means that at some point your business will have to comply. While this administrative issue may at first seem daunting, there are many actions you as an SME owner can take to start preparing now for your staging date, freeing up time to concentrate on the serious job of making your business a success.

Here, I explain what you can do now to ensure your Auto-enrolment staging date goes smoothly.

Ensure you understand Auto-enrolment and what you need to do

Auto-enrolment requires each business in the UK to provide their staff with a pension scheme. How your workforce joins the scheme is dependent on meeting particular criteria, discussed further below.

By 2018, all organisations in the UK need to have met the legal duty to provide a pension for their staff. Employees do reserve the right to ‘opt out’ of enrolment, as some may have their own pensions and don’t want to contribute towards both. In these cases, it’s important to note that your workers can opt back in to the scheme if they choose to, subject to the pension scheme rules. This area must be handled sensitively and communicated accurately, as you could be accused of breaking the law if you encourage any employee who qualifies for Auto-enrolment to opt out.

Gather employee information and find out your staging date

Once you understand what Auto-enrolment is, the first step for your business is to find out when you must start putting your employees into an automatic enrolment programme and begin contributing to their pensions. This starting point is the ‘staging date’. You can find out your business’ staging date by visiting The Pensions Regulator’s website. The next step will be to work backwards from this date to the present and create a plan that allows you to hit your deadlines.

Assessing your workforce should be a part of this plan, so make sure you have all your employees’ vital information at the ready. This includes their full name and contact details, their National Insurance number, PAYE details, date of birth and salary. Employees who fall outside of the ages of 22 to State Pension Age and earn less than £10,000 per annum will not be auto-enrolled into a workplace pension scheme. Instead, they will have the option to ‘opt-in’.

Some pension providers may also require additional information such as the addresses and emails of your employees. Getting all of this information together now, ahead of your staging date, is one way that you can make your Auto-enrolment process run easily.

Calculate the cost

From October 2017 onwards, the minimum total contribution to a pension will be 5% with you, the business owner, paying 2% and the remaining 3% coming from the employee and tax relief. However, after October 2018, the minimum total contribution will rise to 8%, with your payment increasing to 3%. As a result, it is more important than ever to get on top of your finances to make sure you have a complete overview of what’s coming in versus what’s going out. This will enable you to plan ahead for the additional expenses you may incur as a result of Auto-enrolment.

Your staging date is only really the beginning of the Auto-enrolment process. The ‘auto’ in Auto-enrolment relates to your employees not having to worry about doing anything to be included into your pension scheme. The onus is therefore on you to ensure the process goes ahead smoothly.

While this may seem daunting, there are a lot of resources available to help you navigate Auto-enrolment and ease the administrative task. One of the most important resources at your disposal is your accountant, who can not only take care of your bookkeeping, but also advise you on critical business decisions to get your finances in order and prepare you to make contributions each month into your employees’ pension scheme. Additionally, ensure you have the right tools in place to assist you in setting up an Auto-enrolment process and reminding you when to complete certain tasks in order to remain compliant.

Armed with the right information and third party support, you can stay ahead of the workplace pensions curve. By drawing on the sources available, you will be able to easily go through the Auto-enrolment process and concentre on doing what you love — starting, running and growing your business.