Well no actually! This article sets out to explain why even the youngest of companies should be planning for pensions.
Pension planning isn’t top of the list for entrepreneurs, most hope their business will become their pension. But there are good business reasons for those starting companies today to be interested in workplace pensions.
The word on the street’s ‘auto-enrolment’. It means paying money through payroll into a pension scheme you set up for your staff.
In case you missed the Department for Work and Pensions’ ‘We’re all in’ campaign you can catch up with the Pension Regulator’s very clear and stark message for small and medium-sized enterprises (SMEs) and their advisers, which is: ‘Act now, it’s the law’.
So go and get a cup of tea, look up your company’s PAYE scheme reference and get ready to plan.
1: Let’s start with what’s called ‘staging’
The staging date is the date at which an employer’s legal duties for Auto Enrolment begin.
New employers from 1 April 2012 up to 30 September 2017 will have a staging date between 1 May 2017 and 1 February 2018, and for new employers going forward the staging date is based, not on number of employees, but on when the employer first processes a payment via PAYE.
2: Find out when it’s your turn to go
The Pensions Regulator (TPR) website is where you need to head to for the staging date calculator. There are a number of tasks that will need to be completed by your staging date. To help you prepare you could use the TPR’s project planning tools, such as the automatic enrolment action planner to find out what you need to do and by when.
3: Look at your business setup and ask yourself, how will auto-enrolment impact my business?
It can be to tricky to assess your staff so that you know who qualifies and what it will all cost your business, so why not carry out a workforce assessment at Pension Playpen? Simply input the required data to get started.
Assess your staff: The Pension Playpen Workforce Assessment tool is designed to make it easy
There are a number of questions that you need to ask at this stage in order to choose the correct contribution option; it’s important to know how much each option costs you. How will you integrate these costs into your business plan?
Choose the correct contribution: Know how much the various options are going to cost your business
How will you communicate the changes to your staff, shareholders and bankers – assuming you haven’t started already? And how will you choose your workplace pension and record your decision for posterity?
4: Decide whether the people who manage your payroll are up to the job
Payroll is fundamental to the success of auto-enrolment – your payroll software needs to adapt to be able to carry out the functions needed, such as regular assessments, the issuing of communications and the submission and reception of information from your pension company. You should ask yourself, do you need to change your payroll supplier? What process should you follow if you do?
“The one constant is change, make sure you don’t get left behind”
5: If your payroll operator is not interested in auto-enrolment, it’s time to talk to payroll experts who are
A list of accountants who are committed to ensure when it comes to auto-enrolment “no employer gets left behind” is currently being drawn up. In the meantime we suggest you post a request on www.accountingweb.co.uk
6: Choose your workplace pension now
Although your staging date may be two or three years away, you can set up your workplace pension today and use it for your key staff before you stage.
Pressure on pension providers to establish pensions towards the end of the staging cycle (2016 onwards) is going to be huge. Setting up a workplace pension is a good idea (whether you have to or not).
7: Understand the key functions of auto-enrolment — assessment and communications
The rules of assessment are complicated and it’s best you understand how they work. They govern who you pay contributions for and what you have to pay. Getting these rules wrong can lead to harsh fines that start at £50 per day and can easily outstrip the statutory costs of auto-enrolment.
The key communication question is about the right to opt-out? Opt-out details must be dealt with by the pension scheme and regulations exists to protect the employee from employer coercion to opt-out.
“By being ahead of the game you can show you are the kind of employer who is looking to the future”
You’ll need to ask the following questions: Who will carry out the assessment and how? Who will send out the communications and how? How will these decisions be communicated and by whom?
8: Use auto-enrolment to your advantage
It doesn’t take long to get up to speed with auto-enrolment, if you follow the first six tips, you’ll be an authority for your staff and those you wish to hire in the years to come. By being ahead of the game you can show you are the kind of employer who is looking to the future.
Looking after your staff: Share your vision with your staff and take them with you on your journey
One of the biggest problems for startups, is hiring staff who share your vision. All too often entrepreneurs are not too good in including their staff in that vision.
Even if you pay nothing into pensions until you have to stage later in the decade, making yourself an auto-enrolment expert today may be the smartest way to manage staff relations in town.
It’s up to you to decide how you retain, maintain and build on your staff resource. Equally, it’s you who decides how you will ensure you bring your staff with you on your journey.
Find out more about auto-enrolment and workplace pensions via the Department for Work & Pensions website.
Henry Tapper is the Founder of the Pension PlayPen and its Editor-in-chief. Henry is an English graduate from Cambridge University who spent some time as a trawlerman in the Icelandic Merchant Navy before becoming a financial adviser in 1984, he has worked in pensions all his life, becoming Head of Sales at Eagle Star and Zurich. He is now a Director of First Actuarial who are also shareholders of the Pension PlayPen.
