Workplace Pensions in 2017 – What You Need To Know
The UK law on workplace pensions has changed. If you employ someone, even a sole nanny or a cleaner, you will be expected to provide them with a workplace pension.
This is compulsory, and employees will be automatically enrolled into a workplace pension if they meet the following criteria:
- Not already in a workplace pensions scheme
- Aged over 22 but below State Pension age
- Earn more than £10,000 a year
Do you have anyone working for you that matches that description? If so, you need to enrol them. Fortunately, it’s not hard to do when you have the right software.
What is automatic enrolment?
In recent years, it has become apparent that the State Pension will not be enough to support people in their retirement. As a result, employees are now expected to create their own private pension provision and employers are expected to contribute.
Click here to learn more about automatic enrolment.
Key dates for automatic enrolment
This law was introduced to larger businesses in October 2012 and will apply to all employers by 2018.
Businesses have been given dates, called staging dates, by which they must have enrolled all eligible employees. All businesses will need to have done this before 1st February 2018.
Wondering if you’ve missed your staging date? Don’t worry, you can download our free guide to staging dates and get up to speed in no time.
How much do you pay?
This year, the minimum workplace pension contribution is 2% of the employee’s earnings. The employee provides 0.8% from their wages, you provide 1% as an employer, and the remaining 0.2% is tax relief.
This minimum contribution applies to anything earned over £5,876 and below £45,000 in the tax year 2017/2018.
So as a minimum, you’ll need to provide 1% of the difference between £5,876 and your employee’s wage. In 2018, these figures will change as the final staging dates come into effect.
What’s changed in 2017?
As of March 2017, The Pension’s Regulator have been performing spot checks to ensure businesses are compliant. Heavy fines are now being issued to businesses that have missed their staging date.
It is predicted that 598,126 employers have enrolled their staff and just under eight million employees now have a workplace pension.
In July 2017, a scam involving false certificate for “auto enrolment exemption” emerged. The Pension’s Regulator do not approve these documents. Always remember that auto enrolment is mandatory for everyone. You can read about it here.
KashFlow Payroll keeps you fully compliant with the workplace pensions Automatic Enrolment law.
When your business comes towards its staging date, KashFlow Payroll will automatically assess and enrol eligible employees. It will also calculate employee and employer contributions too. Fancy giving it a go?
Try KashFlow Payroll for free
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When it comes to employment, there’s no ‘one size fits all’ approach. Sometimes, it can prove more cost effective to hire an independent contractor to work for you. Before you do this, make sure you know what you need it writing. Find out how and download your free guide to independent contractor agreements.