Auto enrolment is the provision of a company pension scheme for your employees. It makes it compulsory for employers to automatically enrol their eligible workers into a pension scheme. The employer must also pay money into the scheme. All eligible workers should have been automatically enrolled in their employer’s workplace pension scheme and the Kudos payroll service includes assessment for eligibility, Pension letter generation, generation and upload of pension files to relevant providers and production of reports to governing bodies, to comply with legislation.
Kudos have been working with the Pensions Regulator, NEST and Bright Pay Payroll Software to provide a full Auto-Enrolment solution. In the past, many workers missed out on valuable pension benefits because their employer didn’t offer them a pension, or they didn’t apply to join their company’s pension scheme, automatic enrolment changes this.
As of October 2012, it was made compulsory for employers to automatically enrol their eligible workers into a pension scheme and the employer must also pay money into the scheme. Since 2012 automatic enrolment is being phased in, starting with the largest UK employers. So if you’re eligible (see below) and haven’t yet been enrolled into your workplace scheme, you should be by April 2019, at the latest (subject parliamentary approval).
Who is affected?
Now you know what it is, are you ready for automatic enrolment? Here’s how to prepare;
The Pensions Regulator is urging businesses to start planning for auto enrolment at least 12 months before their staging date. Here are our 4 steps for developing your auto enrolment Plan:
Step 1 – Find out your staging date and who you need to enrol within your company.
Step 2 – Understand your responsibilities as an employer.
Step 3 – Seek advice on workplace pensions and choose a pension provider.
Step 4 – Contact Kudos Accountants Durham LLP for advice to guide you through every step of auto enrolment including all employee communications and all queries that might arise.
If you are now less than 12 months to your staging date and are unsure what to do, speak to us and get up to speed on the changing legislation and what it means for your business. Don’t leave it too late.
How much do I contribute?
The amount you must contribute to the pension scheme is determined by the scheme’s rules. However, if you’re using the scheme for automatic enrolment there are minimum contributions you must pay.
Minimum contributions are being introduced gradually over time. You will usually pay pension scheme contributions either as a fixed amount or based on a percentage of earnings.
With Kudos these will be the only contributions to make, but what if you don’t remain compliant?
Each business has a deadline to start complying with the laws (known as a ‘staging date’) and this date depends on how many people you have on your payroll.
There are penalties if an employer doesn’t comply, including;
Fixed fine – if employer doesn’t comply, the regulator issues warning and a fine of £400.
Daily fine – where the employer continues to break the regulations, there will be a fine for each day, with the penalty increasing until the company complies. Daily amount depends on the number of the employees.
Each business has a deadline to start complying with the laws (known as a ‘staging date’) and this date depends on how many people you have on your payroll. You can find out your staging date here.
If you fail to comply, The Pensions Regulator can take enforcement measures, including issuing penalty notices. These are a fixed penalty notice of £400 and a daily fine of up to £10,000 depending on the number of staff you have. They can also issue a civil penalty for cases where you fail to pay contributions due. This is a financial penalty of up to £5,000 for individuals and up to £50,000 for organisations.
How can Kudos help?
Kudos offers a complete, end-to-end solution for auto enrolment. This includes:
- Pension scheme setup wizard including postponement and deferrals
- Completing the declaration of compliance to the Pensions Regulator
- Communications automatically generated for each employee
- Output files generated for chosen pension provider(s)
- Submission of these files to your pension provider(s)
- Automated assessment within each payroll run, enrolling eligible employees and calculating contributions
- We make complying with the Pensions Regulator easy.
Communication for your workforce
We can publish the communications electronically so your employees can access them via their smartphone, tablet, laptop or desktop computer. Payslips, P60’s and all Auto Enrolment Communications, direct to your employees whether at home or on the move at the click of a button.
Employees have to be informed at key stages in the automatic enrolment process. The communications required will be set by their worker status and what stage they are at in the process, and the triggers behind this are complex. The Kudos Durham team takes care of the communications element, so you don’t have to. We work closely with The Pensions Regulator to ensure your workers receive the right communications at the right time.
Our Solution or Third-Party Software?
Here at Kudos we aim to ensure an easy streamlined process for our clients. The complexities of automatic enrolment are well documented and the costs associated with finding a solution to carry out all the required tasks have been debated. Businesses looking to minimise costs by employing middleware and manual solutions risk leaving themselves open to noncompliance and delays in submissions. With the frequency of assessments, the volume of communications and changing work status for employees, both eligible and non-eligible, payroll teams and finance departments can find themselves stretched and left with limited time to focus on business priorities.
Having a variety of companies, with multiple solutions, completing different tasks makes auditing your automatic enrolment process difficult and expensive. We can offer you a full solution completing both your payroll and auto-enrolment at the same time.
As daunting as it may sound, The Pensions Regulator will issue fines for non-compliance with the Workplace Pension Reform. We keep a full audit trail of all communications and with The Pensions Regulator requirements stating that you have to retain full audit flow data for up to six years, this takes all the burden away from you.
The benefits of having a whole software solution offered by one source can actually minimise your business’ overall costs, and allows us to keep all of your automatic enrolment compliance right up to date at the same time.
Looking for a solution that work with your chosen pension provider?
Making sure your solution can support you beyond assessing your employees is another element of automatic enrolment that needs to be considered. Kudos Accountants provides standard and bespoke pension output files.
More pension providers are being added everyday, but if you can’t see your chosen pension provider above, contact the team for more information about bespoke files.