Auto Enrolment Pension Schemes – An Important Consideration for Every Business

As a business owner, there is so much legislation with which you have to keep up these days. Forty or fifty years ago, if you wanted to start up in business you did just that. As long as you paid the appropriate taxes at the end of the year, that was it, and everyone was happy.

But today, business owners have many more things to deal with that have become law. Obviously, as business starts to expand it will need to take on employees and that means running payroll. That, of course, was always the case, but today payroll is far more complex than it used to be, particularly since the introduction of Real Time Information in 2013, which means that businesses now have to deal with taxes and reporting every time an employee is paid.

However, we now also have the auto enrolment pension schemes. Payroll is difficult enough, but auto enrolment pensions are another burden on top for nearly all businesses. You have to automatically enrol eligible employees into your pension scheme. Whether they are eligible or not, depends on their age and how much you pay them. If you are a new business and just about to take on your first employee, you probably do not have a pension scheme, but you have to provide one. That means that you have to find a suitable provider of pensions.

You have to contribute 3% of the employee’s wage to the pension scheme each month while the employee has to contribute 5%. Either of you can choose to contribute more if you wish. These figures relate to a minimum wage of £6,240 per year up to £50,270. If the employee is aged over 22 and falls into the above wage brackets, then you have to automatically enrol him or her.

It Can Get Very Complicated

However, automatic enrolment pensions administration can become very complicated, because, apart from anything else, the employee can decide to opt out at any time. However, he / she can only do that after you have automatically enrolled them.

It gets better. The employee can decide to opt out and then choose to opt back in again! On top of that, you may have an employee who is not eligible to enrol in your pension scheme but can ask to do so, and if that happens you have to enrol him, although you don’t have to pay a contribution. Things can get very tricky!

This is why, at PayCheck, we provide an automatic enrolment pensions administration service that will look after all this for you along with running your payroll. We are here to make your life easier.

Location: London, UK

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