ArticlesMonday 30th October 2017
New Employers must set up a pension scheme
All new employers now need to set up auto enrolment pensions for their eligible employees. Legal duties begin as soon as you employ someone.
Therefore, ideally you will set up a pension scheme before taking on your first employee, so that they can be enrolled as soon as they start. There are many providers of pension schemes for auto enrolment, with varying levels of charges. The government run NEST auto enrolment pension does not charge the employer any fees for setting up or running the scheme.
Once you have set up a pension scheme, you must assess staff every time you pay them (this is usually done by payroll software), and put them in pension scheme if they're eligible. You will also need to write to all staff to tell them how auto enrolment applies to them – whether they will be enrolled, and whether they have the option to join if they wish.
Currently, the contribution that the employer must pay is 1%, and the same for the employee. From April 2018, these rates will increase to 2% for the employer and 3% for the employee. Once you have completed the setup of your pension scheme, you must complete a Declaration of Compliance to inform the Pensions Regulator that you have done everything you need to under auto enrolment law.
You can postpone auto enrolment for up to 3 months. This is very useful if you have short term or temporary workers, but can also be used when first employing someone. It means you can delay some of the administrative burden at a very busy and possibly stressful time. However, you must write to your employees to inform them that auto enrolment is being postponed, within 6 weeks of the start of their employment.