If it hasn’t already done so, Auto Enrolment is almost certainly going to impact on your business or organisation at some point, sooner rather than later. And while there may have been a period where you could get away with burying your head in the sand about it, those days are swiftly running out.
Businesses with PAYE schemes of between 30 to 49 members are currently (as of summer 2015) coming within the realms of this legaslitive regime and employers with 29 or fewer members will fall into the Automatic Enrolment net from 1st January 2016. Their commencement Staging Dates will be staggered over the 12 to 24 months from that date.
So if you have currently escaped having to worry about the challenge of Pensions Auto Enrolment the message is, it’s time to get your business or organisation prepared.
Auto Enrolment, for any business that hasn’t gone though it yet, is a daunting task. It’s leaving most employers fearful and apprehensive but, as with anything new, those emotions are completely normal. However, the good news is that most businesses who have already staged have survived the process admirably.
One of the biggest questions we get asked by most business owners regarding auto enrolment is “what is it going to cost my business?” While giving precise figures in response to this question is pretty much impossible, there are specific costs associated with Automatic Enrolment and knowing what the costs are likely to be will help you be prepared for what’s ahead.
Here are some of the key areas where employers will face costs, both direct and indirect:
- Making the pension contributions
- Investing in the right software
- Paying fees to advisors
- Funding for extra duties to be done by existing staff or outsourcing
Making the pension contributions
As an employer you’ll be required to contribute to your employees pension payments for everyone who stays opted in on your payroll. The amount of your employer’s contribution is likely to start at 1% and rise to 3% over time. It is important to allow for these additional costs in your budgeting.
Investing in the right software
Running a pension scheme is like any other job; having the right tools will make it a whole lot easier. The likelihood is that in order to deal with your payroll you will already have invested in software or will have outsourced your payroll to a provider who can deal with Pensions Automatic Enrolment on your behalf. In most instances a simple upgrade is all that will be required, but it’s important to make the right decisions from day 1 if possible.
Paying fees to advisors
The chances are you will need advice regarding auto enrolment and whether you chose an Independent Financial Advisor or your accountant, there are likely to be fees involved. Establishing the extent of these fees is a good way to plan ahead with prudence.
Extra duties to be carried out by existing staff or by outsourcing
Whether you choose to carry the auto enrolment can in-house or outsource it, there is no getting away from the fact that time will need to be invested to get it right. If you have the expertise in-house and those teams have the capacity to take on the extra workload, then this direction may make sense. In the majority of cases however, the most cost effective option will be to outsource the task to a specialist. Either way, it’s essential to be prepared for the cost of this aspect of auto enrolment.
If you’d like help preparing for the financial impact of Automatic Enrolment on your business, why not get in touch? We can even offer a low-cost Auto Enrolment solution. At the end of the day it costs nothing to chat and we can give you clear and expert guidance that’s perfectly suited to your own situation.