Act now to roll in a happy New Year

Auto Enrolment legislation is set to hit small employers.

Phased in over the past three years, it will begin to bite in 2016 for companies with fewer than 50 employees

These sweeping changes make it compulsory for the smallest employers to enrol staff members into a pension scheme. Our advice is to act now to avoid the New Year rush and stiff penalties for missing your staging date.

Barringtons’ Client Payroll Manager Sue Howie said: “Auto Enrolment is designed to encourage a culture of saving for old age but remains controversial due to the huge burden it places on employers. Setting up the infrastructure can be complex and time-consuming. It needs to be addressed now to stay on the right side of the law.”

In simple terms:

  • If you operate a PAYE Scheme, then The Pension Regulator will be expecting you to do something.
  • Employees are eligible for Auto Enrolment if they are aged between 22 and state retirement age, with earnings over £10,000.
  • Workers in the same age bracket, earning between £5,824 and £10,000, do not automatically enrol but can choose to join (deductions would be the same as those automatically enrolled).
  • Those earning below this are entitled to join if they wish and they make the contributions.
  • Employer contributions currently stand at 1% but are set to rise 3% by October 2018.
  • A one man band, in most cases, will not be considered an employer by The Pensions Regulator but you need to let them know. Similar rules apply to people employing their spouse without a contract.

Sue added: “At first Auto Enrolment was just something large employers had to think about. Now it involves everyone, right down to businesses employing just one or two members of staff.

“You can source your own pension scheme but that can be a minefield so we have a specialist team on hand who can help.”

Barringtons is urging clients to avoid the New Year rush and act now. Remember ignorance will be no excuse!

Contact Sue Howie on 01782 713700 or email smh@barringtons.co.uk

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