Key considerations for long-term auto-enrolment compliance

We've heard so much about auto-enrolment over the past 12 months you would be forgiven for thinking the worst was over, but in truth for most small businesses the challenge is only just beginning: here's how to ensure you remain long-term compliant.

As a small business owner, you’re probably gearing up for your Auto-enrolment staging date, which will likely take place at some point over the next 12 months.

While the first step is making sure you’ve set everything up to automatically enrol employees into a workplace pension by the time your staging date rolls around, you should also be thinking about the processes you’ll need to put in place beyond that date to ensure you stay compliant long-term.

Here, I list some of the areas that will continue to impact businesses long after the initial SME Auto-enrolment staging dates have passed, as well as the things you can do as a business owner to eliminate any potential burdens and concentrate on the serious job of making your business a success.

Picking the right pension provider

You may already offer your staff a pension scheme and if you do, you can keep using it as long as it’s compliant with the requirements of Auto-enrolment. However, if you still need to find a pension provider, don’t underestimate the consequences of picking the wrong one.

Feedback from some of the larger businesses who have already gone through their staging dates is that they made snap decisions about their pension providers and are now regretting their choices.

While it’s possible to switch pension providers once you’ve picked one, this adds an additional administrative burden for small businesses, so it’s best to invest into getting it right the first time. For help, check out the Government’s Pensions Regulator website which has a guide to selecting a good quality pension scheme.

Ensuring finances are in order to handle increasing contributions

From October 2017 onwards, the minimum total contribution to a pension will be 5%, with the business owner paying 2% and the remaining 3% coming from the employee and tax relief.

>See also: AE – 500,000 extra businesses need to comply

However, after October 2018, the minimum total contribution will rise to 8%, with your payment increasing to 3%. With this additional cost on the horizon, it is more important than ever to be on top of your finances and make sure you have a complete overview of what’s coming in versus what’s going out.

This way you can plan ahead for the additional expenses you may incur as a result of continued compliance with Auto-enrolment.

Keeping up with staff movements

While you likely do this already, when a new employee joins your company you will need to have all their vital information at the ready including their full name and contact details, their National Insurance number, PAYE details, date of birth and salary so they can be immediately enrolled into your company’s pension scheme.

Employees who fall outside of the ages of 23 to State Pension Age and earn less than £10,000 per annum will not be auto-enrolled into a workplace pension scheme. Instead, they will have the option to ‘opt-in’.

This means that as soon as an employee turns 23 or an employee that is under 23 starts to earn more than £10,000 per annum they will need to be immediately enrolled into the pension scheme.

>Related: Keeping tax simple – declutter your business

In addition, the increasing health of the economy has had a knock-on effect on the labour market, so make sure you get in the habit of updating your records as soon as an employee leaves your company or increases/decreases their working hours.

Starting a new business

But what if your business is not yet off the ground? If you are thinking of starting a new business, you too will need to go through the Auto-enrolment process. While this additional admin may seem daunting, there are a lot of resources available to help navigate the process and ease the pressure.

One of the most important resources at your disposal is your accountant, who can not only take care of your bookkeeping, but also provide continual advice on critical business decisions to get your finances in order. Additionally, ensure you have the right tools in place to assist you in setting up an Auto-enrolment system and to remind you when to complete certain tasks in order to remain compliant.

Armed with the right information and third party support, you can stay ahead of the workplace pensions curve. By drawing on the resources available, you will be able to easily get and stay Auto-enrolment compliant long-term, giving you time to concentrate on doing what you love – starting, running and growing your business.

Further reading: Company law – transparency and accountability

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