By February 2018, every business with employees in the UK will have to provide an auto-enrolment pension scheme for staff. Previously on the Integrity Software blog, we’ve explained why the government have chosen to implement this legislation, and we’ve published an auto enrolment pensions webinar that expands upon the topic. Now that staging dates are looming for many of the UK’s construction SMEs, it’s time to double check that your finance department is ready for.
#1 Do you know your staging date?
You should be aware of your company’s staging date by now – that’s the date where your auto-enrolment duties start - when you’ll need to begin recording and reporting data on your pension scheme contributions. To find out your staging date, head over to the Pensions Regulator websiteand type in your PAYE reference. The regulator recommends that you begin planning for auto-enrolment at least 9 months before your staging date. The site also lets you create your own action plan to help you understand what needs to be done during this period.
#2 Have you budgeted for pension contributions?
Most estimates suggest that between 25% and 50% of staff will choose to opt out of auto-enrolment schemes, but you should still budget for making employer contributions to the pensions of 100% of your staff. The minimum employer contribution starts off at 1%, before rising to 2%, then 3% in later years. You can also estimate employer contributions for each staff member. It’s against the law to encourage staff to opt out of an auto-enrolment pension, so don’t count on reducing your contributions in this manner. If you use accounting software it should be quick and easy to find out if your company can absorb these new costs or if you’ll need to find savings elsewhere.
#3 Have you chosen a pension scheme?
The next step is to choose a pension scheme that works for your company. There are plenty of schemes out there, including the government-formed NEST, which must accept all employers that join it. Some schemes will allow for higher contributions than others, and some will be more expensive than others. You should double check that your scheme(s) qualify for auto enrolment. You should also check with your accounting software provider to see if there are any compatibility issues. You can choose multiple pension schemes but most SMEs find it much simpler to use the same one for all staff.
#4 Do you need more staff in financel/HR?
These schemes require you to report employee and employer contributions on a regular basis, so even once you’ve registered your staff under the scheme, your payroll team will still have additional duties to perform each month. Accounting software should reduce the added burden on your staff, but larger companies may still wish to bring in an extra staff member (perhaps on a part time basis) to help manage the load.
#5 Have you made the necessary changes to your accounting software?
There are a few steps you need to take to ensure your accounting software takes into account auto enrolment pension contributions and whether or not staff qualify. The precise changes required will vary depending on your software provider. If you’re using Evolution M, check out our online resourcesor contact your account manager or our support team.
Once your finance team has completed these five important steps, you’ll be ready for auto enrolment pensions.
Looking for accounting software to help you manage pension schemes? See what Evolution M has to offer.