Planning your journey is key, as there may be some road blocks, or hold-ups ahead which require the plan to be diverted or changed. But, 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.
What needs to be done?
- Identify your destination
- Identify the time it will take to that destination
- Identify the costs of the journey
- Identify potential problems that might occur during the journey
- Decide who you are going to take with you on that journey
- Decide on other resources that might be needed
- Make sure your vehicle is fit for purpose
- Check progress against the journey plan
- 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 introduced new legislation to get more people saving for their future. This means 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.
In 2014 this applies to 39,000 employers and 1.4 million workers. Is your company one of these?
Destination: Employers to have a Qualifying Workplace Pension Scheme which must:
- Meet the quality and qualifying 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 reach it and have everything in place for it.
It is 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.
If you don't know your staging date go to The Pension Regulator site at:
http://www.thepensionsregulator.gov.uk/employers/tools/staging-date and you will be able to find it.
3. Identify the costs of the journey
With the changing price of fuel and the 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 is so important for any size company. This includes, for example, professional advisers, communication, administration, documentation, technology, resources and on-going contributions.
Make sure you understand the one-off and on-going costs.
Make sure you are not overpaying for unnecessary add-ons.
You will ultimately (from 2018) have to contribute a minimum of 3% and your staff will have to contribute 5% (which includes tax relief), however you can build up to this from your staging date. The initial contribution required is 2% which can be 1% employer and 1% employee. This increases from 2017 to 2% employer and 3% employee.
4. Identify potential problems that may occur along the way.
During any journey you may have to overcome road blocks, accidents or hold ups for a number of reasons.
Planning is key. Start early and don't leave things to the last minute, as that will be certain to cause more problems.
Appoint an implementation manager - one of your professional advisers could 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 it will have minimal impact to your bottom line when you have to do it.
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, who will make the journey less tiresome, and more enjoyable.
This journey for you is important, so you need to choose your partners carefully and make sure they take the stress and strain away from you; that they don't create any unnecessary diversions themselves and will support your journey fully.
There are many organisations out marketing to companies with a range of different products and tools to assist the employers. Buyer beware. Some of these are not needed and will only create another distraction and increase the overall costs, ensure that you work with specialists in their field and 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, satnav, food, drink etc.
As with any journey, you will need to ensure you have the correct resources at the right time.
So - 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?
Will you need to recruit?
All matters 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 at the required time.
You will need to make sure that either your existing pension scheme or any new pension scheme solution proposed is fit for purpose and complies with the minimum criteria that classifies it as a Qualifying Workplace 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. So, understand what the minimum criteria are and ensure your partners are delivering a solution that is fit for purpose and complies.
8. Check progress against the journey plan
Unless you keep track of progress it is very easy to go off course, and just not arrive at your destination when you need to.
By treating the implementation of your Qualifying Workplace Pension as a project, you will have increased your chances of ensuring you can get to the destination at the required time as you will be having someone tracking and reporting on progress, identifying issues and finding resolutions. Asking for decisions to be made when the plan has to change it is a key skill that is needed, and often can be supplied by one of your chosen partners.
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 that 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.
