28 February 2017
Anyone about to start up a business who is thinking of putting pension matters on the back burner until they have sorted seemingly more pressing issues is in for a nasty surprise.
The announcement of new rules, which many accountants and other business advisers may not be up-to-date with, means that automatic enrolment must be an immediate priority.
When the original automatic enrolment staging dates were established in April 2012 they only catered for "newborn" PAYE schemes up to the end of September 2017. But the Department for Work and Pensions (DWP) has recently confirmed in a meeting with Chase de Vere, that the automatic enrolment duties for newborn employers after this date will start immediately (although, like all other schemes, they will have the option to postpone the process for up to three months.)
The exceptions will be those business owners who have yet to take on their first member of staff, as it is only then that automatic enrolment becomes relevant. But these must be especially careful not to forget about the issue further down the line when they do recruit someone, as this is a very common mistake to make.
Once they have taken on their first employee they must start automatic enrolment immediately. Alternatively, they have six weeks from the date at which they want to use postponement within which to get out a postponement notice.
Somewhat strangely, the new rules will mean that new employers will be staging earlier than some of the older ones. For example, a PAYE scheme set up in October 2016 will have a staging date on January 1st 2018 but a scheme set up in October 2017 will have to stage immediately.
The key message for all new businesses and their advisers is that automatic enrolment needs to be considered as an integral part of the project. This even applies if larger companies are setting up new divisions because a separate legal employer with its own PAYE scheme counts as a new employer.
Fortunately, there are solutions available that automatically integrate automatic enrolment with payroll, meaning that the employer has to do very little, and Chase de Vere can advise on how to obtain these. Otherwise the timelines involved are going to be very tight and it's essential not to be caught asleep at the wheel.
If you would like advice on obtaining the right integrated solution or on any other aspect of complying with the automatic enrolment requirements then please do not hesitate to contact us on 0345 300 6256.
The value of investments can fall as well as rise. You may not get back what you invest.
Financial Conduct Authority does not regulate some aspects of automatic enrolment.