As Auto-enrolment and the obligation to establish a Workplace Pension Scheme moves on to smaller employers I thought that it might be helpful to clear up some of the popular “Myths” that appear to have arisen around Auto-enrolment.
- “I don’t have to set up a scheme because none of my employee’s qualify for a contribution”
The legislation requires all employers to make a pension scheme available to all of their employees so that the employees can pay a contribution from their salary should they choose to do so.
- “My employees have told me that they will all opt out so I don’t need a scheme”Employees can only “Opt out” after they have been automatically enrolled into a Workplace Pension Scheme. So you must set up a scheme and then allow your employees to “Opt out” Failure to set up a scheme could be seen encouraging “Opting-out” resulting in the employer being fined by the Pensions Regulator.
- “I am the sole employee so I can ignore the Pensions Regulator’s letter”
As a sole employee you do not have to establish a scheme. However, you will need to contact the Pensions Regulator to claim your exemption.
- “I ignored Stakeholder Pensions and I didn’t suffer any consequences”
The Pension Regulator has already intervened with many employers requesting information, issuing enforcement notices and fines.
It is essential that Employers give full attention to all letters they get from the Pensions Regulator. The action required to comply with the legislation will differ between employers. Factors to be taken into account are:
- Whether you have full time and or part time employees?
- Are employees monthly or weekly paid.?
- Do employees earn overtime, bonus, shift pay?
The key to Auto-enrolment is to start planning early and to make sure that you regularly review and monitor progress.
This will ensure success.