Alison Carlyle writes:
If your organisation employs any staff, new pensions regulations mean that you will soon be obliged to provide a workplace pension scheme for them, automatically enrol those staff who are eligible, and make contributions to the pension scheme for eligible staff.
The regulations apply even if you only have one employee (although they do not apply to those who are self-employed) and there is no exemption for charities. Both full time and part time staff are included, although their monthly earnings and age determine whether they are eligible to be automatically enrolled or have the right to opt in: those who are aged between 22 and state pension age and earn over £833 per month must be automatically enrolled.
Every organisation is given a staging date by which the pension scheme must be in place. This will be notified to you by the Pensions Regulator, which will ask for a contact in your organisation to be responsible for automatic enrolment.
If your organisation does not already have a pension scheme which can be used for automatic enrolment, you will need to set one up. There are private schemes available, or alternatively there is a government scheme called the National Employment Savings Trust (“NEST”). NEST must accept all employers wishing to use the scheme. It’s free to use and you can set up an account online: more information and registration is available at www.nestpensions.org.uk
Once you have set up the scheme, the scheme provider will ask you for information about your staff to allow you to make contributions. If you have a PAYE provider then they may administer auto enrolment for you. For example, SCVO’s payroll service will administer auto enrolment and provide a monthly report. However, they will not make payment of contributions to the scheme, which will remain the responsibility of the individual organisation.
After the staging date, all staff must be informed as to how automatic enrolment affects them. The Pensions Regulator has drafted template letters which can be used for this. Staff have the right to opt out of your scheme if they wish, but you must not encourage them to do so.
Both the employer and employee must make a minimum contribution to the scheme. For employees, this will be deducted from their salary through payroll. The required minimum contributions will rise from 1% each from employer and employee before 30 September 2017, to 2% employer and 3% employee between 1 October 2017 and 30 September 2018, to 3% employer and 5% employee from 1 October 2018.
Employers must certify that they have complied with the regulations within five months after their staging date, and must continue to comply with the regulations on an ongoing basis, for example by enrolling staff who become eligible or join the organisation.
There are comprehensive guides to automatic enrolment for both employers and employees on the Pensions Regulator website at www.thepensionsregulator.gov.uk
The information in this article is a brief summary only, and details of how the new regulations affect your organisation should be checked with the Pensions Regulator.
Alison Carlyle is Chair of the Scots Music Group, the Edinburgh-based education organisation which provides traditional music classes and workshops for adults.