Are you ready to Pension Auto enrol? The basics for micro businesses
The government’s Pension auto enrolment is now a reality for all but the newest employers. Regardless of the size of your business and the number of employees you have, you are required to make a response to The Pension’s Regulator about auto enrolment.
Communicating with The Pensions Regulator
Communicating with The Pensions Regulator does not mean you have to auto enrol employees, it means you are indicating whether or not you have employees to auto enrol. As with all aspects of HMRC, non-communication is always the issue which can trigger a fine or worse. So, the first thing with auto enrolment is that you must communicate with The Pensions regulator even if you have no employees to auto enrol.
Some exempt employers (not required to set up an auto enrol pension system) as imposed by the Pensions Act 2008, are those with employment where the employer has the employment contract for e.g. husband and wife director/employees or those employers working with personal service companies (see my blog on personal service companies) or a single director owner-managed business where the owner is the only person involved in the business. These employers do not need to comply with auto enrolment.
Eligible, Non-eligible and Entitled workers
If you have been following the news/discussions about auto enrolment you might have heard the terminologies: eligible, non-eligible and entitled workers. These are the employees (if you are not an exempt employer) you need to auto enrol either because they meet the criteria or because they have the option to be enrolled. Those who must be enrolled (eligible employees) earn over £10,000 (or pro rata this amount if they work part-time). The non-eligible employees earn between £5,824 and £10,000 (or pro rata if part-time). Entitled workers earn £5,824 or less and who are offered a chance to join the scheme.
Nominating a Contact
If you have received a letter from The Pensions Regulator, indicating that you need to nominate a contact, please do that by the deadline date stated. There is no question that pension auto enrolment will cause both employer and adviser more work.
Advice and support for your Pension Auto enrolment
If you are a micro business that is not an exempt employer, you will want advice and support to help you through this newest set of employer regulations. The Pensions Regulator is very aware that some employers may blatantly refuse to set up a scheme, and with this in mind, have made it a criminal offense to comply with various fines to be imposed for not communicating with them at the right time.
Your accountant or business adviser is there to help. Please contact us if you need help. You can get more advice from The Pension Regulator for more information at http://www.pensionsadvisoryservice.org.uk/
More on auto enrolment – postponement and selecting a scheme in my follow-up article.