The June 2017 newsletter from The Pensions Regulator [TPR] stated that ‘According to our research, nearly half of the accountants we asked didn’t know that, from October, new employers will have AE [automatic enrolment] duties when their first member of staff starts work’.
This lack of awareness is damning news for us ‘so-called professionals’ and could cost our clients’ money, and us, clients.
But how do we rectify the situation? How do we keep up with all the information coming at us from the internet, journals, blogs, seminars, webinars and so on? And, once we have ‘inwardly digested’ the current updates, how do we know whether they are permanent or just a wish-list which may be ‘culled’ a week or so later?
The answer is to try your best, don’t stress, and rely on reputable organisations to provide the relevant information. Below is some of the latest information regarding automatic enrolment, NEST and the ‘Naming and Shaming’ of employers not complying with their duties.
When to stage is dependent on the age of the business and the number of workers engaged. At first, the staging dates were easy to identify as the information required was quite straight forward. Now though, it is not so simple.
- For employers who employed workers as at 1 April 2012 the allocated staging dates was up to 1 April 2017
- For employers whose businesses started after 2 April 2012 but before 30 September 2017 who had a PAYE scheme the staging dates are between 1 May 2017 and 1 February 2018
Now identification gets less easy as several circumstances overlap and the trick is to be quite clear not only on when the business first started, but whether there was a PAYE scheme in place when it was started, and when the first worker was engaged.
- For employers whose businesses started on or before 1 April 2017 who did not have a PAYE scheme on 1 April, the staging date is 1 April 2017
- For businesses created between 2 April 2017 and 30 September 2017 who had a PAYE scheme in existence before staff were employed, their staging date is 1 January 2018 (if the first pay day is between 2 April and 30 June 2017) or 1 February 2018 if the first pay day is 1 July to 30 September 2017
- For businesses created between 2 April 2017 and 30 September 2017 who did not have a PAYE scheme in existence before staff were employed, their duties start the date the first member of staff is engaged and their staging dates will be 1 January 2018 if they first pay their member of staff between 2 April and 30 June or 1 February 2018 if they first pay their member of staff between 1 July 2017 and 30 September 2017
For businesses set up after 1 October 2017 automatic enrolment duties will start as soon as their first worker is employed, even if the worker does not earn enough to pay NICs and income tax. Though the worker in this circumstance may not pay NICs and income tax, and therefore the employer does not need a PAYE scheme, the worker may wish to pay towards a pension. For this reason the employer must contact TPR and start automatic enrolment duties.
The employer staging date can be found here. Remember, the automatic enrolment duties start before the staging date, and from 1 April 2017 the trigger for new employers is the day the first worker is engaged.
There have been some recent changes to NEST (National Employment Saving Trust) that may make it a more attractive pension fund. When NEST was first set up there were constraints built into it to prevent its unfair advantage over other pension providers. The constrains were:
- An maximum contribution limit of £4,900 (2016-17)
- Transfers of pension savings from other pension providers were not allowed
These constraints may have put it at a disadvantage when compared to other pension providers, and from April 2017 these constraints have now been removed. So, from 1 April 2017:
- Transfers from registered pension funds can be made into NEST
- The upper limit of £4,900 has been removed
Government is also reviewing the products and services that NEST offers with a view to expanding them in the future.
Naming and shaming
Log on to TPR and one of the first headlines of note is the ‘Press release’ that TPR is carrying out AE spot checks on Sheffield employers. The results of the spot checks, and fines for non-compliance is published on the website.
Quoting Darren Ryder, TPR’s Acting Director of Automatic Enrolment, “Automatic enrolment is not an option, it’s the law. Where we find employers are not complying with the law, we will use our powers to make them comply.”
This needs to be considered when dealing with our clients. Their reputation as well as ours is at stake and could make the difference between a thriving business and one that may no longer be viable.
The two main points from this update are:
- For new employers, from 1 April 2017 the automatic enrolment duties start the day the first worker is engaged, not the day the employer operates PAYE
- TPR means business. And non-compliance will not be tolerated
Keep up to date with automatic enrolment and all will be well. Overworked? Don’t have time? Consider working with another agent as a support. After all, ‘two heads are better than one’.
Subscribe to The Pension Regulator monthly newsletter here.
Julie Hodgskin is a fellow member of AAT, runs a licensed accounting practice and is a technical materials author for CIPP.