UK: The Auto-Enrolment Route Planner - Engaged Investor Expert View

"Implementing a qualifying workplace pension is a journey that needs planning if you are to reach your destination", says Christine Hallett.

Planning the journey is key, as there may be some road blocks ahead which require the plan to be diverted or changed. Without an initial plan, it is very likely that companies will lose their way which will cause confusion and stress! So how can the journey be made as stress free and as clear as possible? Let's discuss it...

What needs to be done?

1) Identify your destination

2) Identify the time it will take to that destination

3) Identify the costs of the journey

4) Identify potential problems that might occur during the journey

5) Decide who you are going to take with you on that journey

6) Decide on other resources that might be needed

7) Make sure your vehicle is fit for purpose

8) Check progress against the journey plan

9) Arrive at destination safely, and in control

1. Identify your destination

If the destination is unknown you will never arrive. So how much do you know about your destination within the Auto-enrolment rules?

From October 2012 the Government are introducing new legislation to get more people saving for their future. This will mean that all employers large, medium and small are required to automatically enrol certain employees into a qualifying workplace pension scheme and make contributions into it.

Destination: Employers to have a Qualifying Workplace Pension Scheme which must:

  • Meet the quality requirements
  • Be an occupational, personal or stakeholder pension scheme, and
  • Be tax registered

2. Identify the time it will take to that destination

If the timings specific to your company journey are not known will you arrive at the destination in time? So are you aware of the last date by which your company must arrive at the destination?

The date the employer duties first apply is known as their 'staging date', each Employer must identify their own staging date (the date when a Qualifying Workplace Pension must be in place) and ensure they are there and have everything in place for it. It's based on the number of people in their largest Pay As You Earn (PAYE) scheme on 1 April 2012. Any changes to the size of the workforce after 1 April 2012 won't affect the staging date.

  • List of staging dates for PAYE schemes with 250 or more persons
  • Have various dates from October 2102 through to March 2014
  • List of staging dates for PAYE schemes with fewer than 250 persons
  • From 1st April 2014 through to 2015

Any companies and small business's less than these numbers have various dates between 2015 and 2018.

3. Identify the costs of the journey

With the changing price of fuel and variances across the country, we need to know what it will cost to get to the destination.

Considering all the costs before, during and after this process is important for any size company, and these will include professional advisers, communication, administration, documentation, technology, resources and on-going contributions. Make sure you understand the one off costs and the on-going, make sure you are not overpaying for unnecessary add-ons.

You will ultimately have to contribute a minimum of 3% and your staff will have to contribute 5% (which includes tax relief).

4. Identify potential problems that may occur along the way

During any journey you may have to overcome road blocks, accidents and hold ups for a number of reasons. Planning is key. Start earlier and don't leave things to the last minute, as this will be certain to cause more problems. Appoint a project manager - one of your professional advisers will perform this role.

Consider the financial impact on the company by starting to provide a pension earlier than the staging date. Consideration could be given to implementing it as part of an on-going remuneration strategy up until staging date so that it will have minimal impact to your bottom line when you have to complete the process.

5. Decide who you are going to take with you on that journey

On any journey it is important to travel with people you feel comfortable with, that will make the journey less tiresome, and more enjoyable. This journey for you is important and you need to choose your partners carefully. Make sure that they take the stress and strain away from you and that they don't create any unnecessary diversions themselves. They need to support your journey fully.

There are many organisations marketing different products and tools to assist employers - buyer beware - some of these are not needed and will only create another distraction increasing the overall costs. By ensuring that you work with specialists in the field. you will get the right result at the right price.

6. Decide on other resources that might be needed

The journey won't all be about you and your passengers. You need to consider whether you need additional things for the journey (like maps, sat nav, food, drink etc).

As with any journey you will need to ensure you have the correct resources at the right time - do you need in house assistance? Who might that be? Do you need a budget approved? Do you need board approval? Do you outsource the delivery of your solution? All of these matters need to be considered as part of your plan.

7. Make sure your vehicle is fit for purpose

If your vehicle is not fit for purpose you may never arrive at your destination or at the required time. You will need to make sure that either your existing pension scheme or any new pension proposal is fit for purpose and complies with the minimum criteria that classifies it as a qualifying work place pension scheme.

If it doesn't and you don't have the appropriate pension scheme in place by the correct date, the consequences are serious in terms of fines that could potentially be levied by the Pensions Regulator. For this reason you must understand what the minimum criteria are and ensure that your partners are delivering a solution that complies with these and is fit for purpose.

8. Check progress against the journey plan

Unless you keep track of progress, it is very easy to go off course and fail to arrive when you need to at your destination. By treating the implementation of your Qualifying Workplace Pension as a project, you will have increased your chances of getting to the destination on time because you will have someone tracking and reporting on progress. They should also identify any issues and offer resolutions. Asking for decisions to be made when the plan has to change is a key skill and often this can be supplied by a chosen partner.

9. Arrive at destination safely, and in control

By working with the right team you will have the right solution, at the right price and one which will deliver the on-going requirements for you and your workforce.

Choose wisely.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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