Employers : Pension Auto enrollment - current status updates

[talkinpeace]

For most small employers, auto enrollment dates range between January 2016 and May 2017

To date, all of the guidance from the PRA has been very draconian.

Already they have made it clear they are, and will be, funding themselves by making fines higher than cost of compliance.
But now the fun bit.
The last tranche of employers include lots of micro businesses (many of whom fall a million miles outside of IR35)
To date we have been told (repeatedly) that every employer MUST set up a scheme, even if they will never, ever have a qualifying employee.
This alone will cost over £500 per PAYE scheme number
YIKES
However this morning I saw a copy of an email from a member of PRA staff stating that employers who will never have an AE employee need not have a scheme.

I'll believe it when I see it on their website
BUT
Please could I ask every small business owner and accountant to ask the PRA what the procedure will be for "nil contribution schemes"
as if we do not have to make our clients jump through that pointless hoop, it will be a good thing.

Responses seem to take 4 weeks, but PLEASE
post them as they come in.
I'll post the one I saw when I'm back on my other machine.

 

[UK Contractor Accountant]

I thought the AE duties only apply to 'workers'.

Companies with Directors not working under a contract of employment have no 'workers' and are therefore exempt from AE.

I have this in writing from the Pension Regulator for several of my clients payroll schemes.

 

[talkinpeace]

If the only people in the PAYE scheme are directors, then yes, you are in the clear
BUT
you will no longer get the ERS NI allowance

so its a catch 22 and I suspect that the email I saw will be backtracked
BUT
the more people who ask the question, the more coherent the reply has to become

 

[ThePublisher]

I am sole director and have one part time employee who earns less than the qualifying threshhold for auto enrollment. I have my own pension scheme already which my company contributes to. I have asked my employee if they want me to set up a scheme for them to contribute to, but they have declined. I therefore have no need for a scheme but the feeling from professionals I have spoken to (my IFA) seems to think I will have to set up a scheme anyway. I don't know who to contact to clarify the situation. My vesting date is late next year.

 

[justintime]

My understanding is that you will need to set up AE scheme if you have 1 or more workers, even if they are below the threshold. I have noted Talkinpeace comments above and that's interesting, so I will ask the question he advises.

In the meantime I suggest you hang fire. You don't have to get the ball rolling until at the earliest a year before your staging date so no panic yet. I would also avoid using an IFA if you can help it. A good accountant or payroll company should be able to do the necessary work at a fraction of the cost.

As soon as I have more information I will post back here.

 

[justintime]

To date we have been told (repeatedly) that every employer MUST set up a scheme, even if they will never, ever have a qualifying employee.
This alone will cost over £500 per PAYE scheme number
YIKES
However this morning I saw a copy of an email from a member of PRA staff stating that employers who will never have an AE employee need not have a scheme.

I'll believe it when I see it on their website
BUT
Please could I ask every small business owner and accountant to ask the PRA what the procedure will be for "nil contribution schemes"
as if we do not have to make our clients jump through that pointless hoop, it will be a good thing.

Responses seem to take 4 weeks, but PLEASE
post them as they come in.
I'll post the one I saw when I'm back on my other machine.

I think you make very valid points, and I have followed your advice and requested clarification from PRA.

 

[UK Contractor Accountant]

Does it not say on the PRA site if you have only have employees earning below £486 per month then they have a 'right to join a pension scheme' which does not have to be an AE Pension Scheme. If they ask you to, you must provide a pension scheme for them, but you don’t have to pay contributions.

 

[Energise Accounting]

my understanding is
1. you have to setup a pension scheme regardless
2. people earning below the threshold can still request a pension scheme however, the employer dose not have to contribute.
3. All employees are auto enrolled who earn over the threshold once a deduction has been made then they can opt out.

 

[Anonymouse72]

i've not seen anything about only opting out after a deduction has been made, thought they could opt out before?

 

[talkinpeace]

they have to have a scheme to opt out OF : its part of the paperwork ....

 

[Claire Dymond]

I am also a sole director of a ltd co. and one employee who is OVER the income limit so I need to go through the AE for the staging date of 1 Feb 16.
He is a wealthy man who runs his own SIPP and doesn't want a workplace pension to be mismanaged by 'incompetent fools who couldn't run a bath'.
From my understanding I can set up the pension through NEST http://www.nestpensions.org.uk/schemeweb/NestWeb/public/home/contents/homepage.html
at no cost to me and he can opt out if he wishes to after being given all the facts in his welcome pack.
I'm also the director of another company who is just about to employ our first member of staff who has a workplace pension with Aviva and I have no idea how that transfer works?

 

[Hillyer]

Claire, I work for a wealth management company, and the advisor would normally recommend NEST for small businesses since it is so useful. Would you look to transfer your new member of staff to NEST?

 

[talkinpeace]

I'm looking into options at the moment and NEST looks really clunky
I suspect that "Now" pensions will be the best bet as its interface and reporting is simple enough for non professionals

 

[Anonymouse72]

have you had a look at The Peoples Pension?

 

[David Griffiths]

I suspect that "Now" pensions will be the best bet as its interface and reporting is simple enough for non professionals

In that case it has improved beyond all recognition since I had the misfortune to use it last year. It was spectacularly bad at that time.

 

[talkinpeace]

have you had a look at The Peoples Pension?

Yes, and I should probably check it further. Sadly some of the decision makers on the issue are rather unreconstructed so may baulk at the name. Stupid, but that is what I have to deal with.

 

[talkinpeace]

At last, some good news.
The Pension regulator site has now put in clear words that if none of your staff will be eligible for Auto Enrollment you do not have to set up a scheme by your staging date.
See here
http://www.thepensionsregulator.gov.uk/employers/employer-duties.aspx

I bet the pension companies are as relieved as small employers

 

[justintime]

Got my email back from TPR. If you have workers earning between £5824 and £9999 and no-one earning above that, you still have to go through the assessment stage and file the compliance but don't have to have a scheme in place if no one wants to opt in.

If all workers earn below £5824 then you don't have to go through the rigmarole other than signing the compliance on TPR website but you must provide a pension scheme if an employee asks to join one.

 

[talkinpeace]

*justintime*
OOHH Cool : I've been watching the emails that have driven that change and am so, so pleased that it is trickling out
running a small business starts to become economic again