Six Steps to Find the Right Pension Scheme for Your Employees
January 24, 2019
Are you a small business that’s hiring? Have you grown to the point where you now have a staff that’s larger than 30? Are you about to?
If so, congratulations. It means you’re making money, expanding, achieving your goals–and it might be time to start thinking about finding the right pension scheme for your employees.
That’s right: If you run a business in the UK and have more than 30 people working for you, the Pensions Act 2008 mandates that you place certain members of your staff into a workplace pensions scheme and make contributions to their pensions–and accountants in Leeds can help.
As you probably know, not all pension schemes are created equal.
Workplace pensions help your employees save money for retirement. Each payday, employees contribute a certain percentage of their pay into the pension scheme. It’s an important tool to help ensure that people can retire–and it’s not optional.
But finding the right pension scheme isn’t always easy. There’s a lot to consider, and here are six important tips to get you started:
1) Choose a pension scheme
There are basically two ways to go about selecting a pension scheme. You can find one for yourself, or you can work with an adviser.
If you choose the former, you’re going to have to wade through a long list of UK pension schemes, each with its own nuances. You’ll also need to understand what you can and can’t do with regard to pension schemes.
It can be overwhelming, which is why many businesses choose to work with an adviser.
2) Assess your staff
Not every employee needs to be put into a pension scheme.
Whether or not they do depends primarily on two main factors: age and monthly gross earnings.
You’ll also need to assess seasonal employees, temporary staff and those whose hours and pay vary. This is an important step because you will need to use the assessments to complete your declaration of compliance.
3) Put your staff into a pension scheme
Once you know which staff needs to be put into a pension scheme, it’s time to do it.
This step requires a lot of information gathering, fact-finding, and paperwork–copious amounts of paperwork.
You’ll need to:
share information about your employees
knows how much they’ll be contributing
know how much you’ll be contributing
And then you need to make arrangements for the contributions to happen.
4) Arrange for auto-enrolment
Contributing to a pension scheme every payday can become tedious and time-consuming. Thankfully, there is a system that can make it painless: auto-enrolment.
Auto-enrolment allows you and your staff to automate their pension contributions each payday. It’s fast. It’s simple. And it makes the process of managing your pension scheme much, much easier.
Of course, it also involves paperwork, privacy, and precision. That’s why many businesses choose to work with advisers to set up and monitor auto-enrolment systems.
5) Communicate with your staff
This is an important step, one that is required by law.
Within six weeks of your staging date, you need to write to each staff member to explain whether or not they have been put into a pension scheme.
It’s not an optional step.
As you can imagine, writing letters to (at least) 30 employees can be quite the task–especially if they do not speak English.
Five months. That’s how long you have from the point you begin the pension scheme enrollment process to when you must declare your compliance.
And it’s not as easy as simply stepping outside and shouting “I declare compliance” into the air.
The government requires you to confirm at least 19 things before you can make the declaration. It involves everything from providing details about your PAYE scheme to knowing your registration number to be precise about the number of employees that have or have not been put into a pension scheme.
Get it right and you’re golden. Get it wrong and you may face a stiff fine.
Ready to get started?
If the business is booming and your staff is growing, it’s probably time to start looking at a pension scheme for your employees.
Sure, you can go it alone.
But why risk it, especially when there are accountants in Leeds available to help you get it done correctly?