August 2014

Have You Set Up Your Company Pension Yet?
Dear <<First Name>>,

For the last couple of years, we’ve been hearing about the new auto enrolment pension scheme. Eventually, every eligible employee in the country will need to be provided with a pension by the company they work for. But who exactly is eligible? When do you have to start your new pension scheme? What if you already have one running?
There are lots of questions to be answered, so this issue of Working Together will highlight some of the things you need to be doing and thinking about now, to get your business and your employees ready.
While I’m not a pension expert, I’m working with a number of them, who have shared this information with me and who can answer all of your questions, so if you have any, do get in touch.

Best wishes,

0118 940 3032

Have You Set Up Your Company Pension Yet?

All businesses will soon have to provide a pension for their staff – if you haven’t already done so. The start date depends on the size of your business. But there's a lot more to think about than just the date.
Here are some things to consider:
  1. Don't leave it too late. The auto enrolment 'to-do' list for employers will take some time to complete; don't leave it to the last minute. Collating data can mean sourcing information from various systems. In addition, enrolling employees to the pension scheme could involve changes to their contracts of employment, which requires a three month consultation period. An early start is ideal, such as 6 to 12 months ahead of your staging date.
  2. Understand your key dates. It's crucial that you not only understand when your staging date is, but also any key company dates such as the pay reference period and payroll cut off. Documenting these dates and then overlaying the new dates when actions need to be completed as a result of pension reform legislation will help gauge the impact on the business. It will also help decision making, such as the need for a waiting period and if so, how long it should be.
  3. Quality of data is key. It's easy to underestimate the complexity of the data you require. You'll need data for employee eligibility assessment, joining, contributions and opt outs. Inevitably this will come from different sources and systems. It takes a significant amount of time to do this within payroll cycles and the frequency that this data is needed also adds a layer of complexity. The quality of the data and the processes for sourcing the data for each payment cycle will be crucial to how smoothly that works each pay period.
  4. Choice of contribution basis. Your chosen scheme must meet a quality standard, based around a minimum level of benefit or contribution, so you need to start budgeting for any extra costs. There is more than one acceptable contribution basis and they can be mixed and matched across the workforce to suit different reward mechanisms or pay patterns. What will work best for you? The key point is that the contribution basis and definition of earnings can be chosen to suit your business.
  5. Method of contribution. Salary Exchange should also be considered as this can offer you significant cost saving benefits. However, where salary exchange is being used, this decision should be made prior to the scheme staging, otherwise it can cause additional administration for employers.
  6. Existing joining methods may be fit for purpose. Many employers believe they will need to change the way they currently join employees to their pension scheme. However, your existing method and processes for joining may already be suitable. For example, if your employees already join the pension scheme via their contract of employment, then there may be no need to introduce a different method. This can also allow all staff to be treated the same way, regardless of their age or income. But it's likely to mean changing processes and potentially employment contracts, to meet the new legal requirements.
  7. Use waiting periods to fit your business. The majority of employers have used waiting periods aligned with payroll so employees join on the first day of the pay reference period. This avoids having to calculate, explain and manage part payments. But it is also possible to build in a waiting period to avoid one off events such as bonus payments or seasonal increases. Or to allow time to organise contract joining before the auto-enrolment duty kicks-in. But remember while employers can delay assessment and auto-enrolment, they cannot delay the statutory communications to their employees.
  8. Communicate with your employees early. Engaging with your employees and clearly communicating the changes in advance of auto-enrolment will make sure that when it happens, they understand why money is being deducted from their pay. This will also ensure they appreciate the value your contribution is adding while reducing employee questions.
  9. Review your existing default investment funds. You have a regulatory responsibility to make sure the auto-enrolment default investment option is suitable for your employees that will be enrolled to the scheme. Existing investment solutions may not be appropriate. Advice is crucial to getting this right. You also have a responsibility to have an on-going investment governance framework in place.
  10. Remember to register with the Pensions Regulator. You must register your scheme with the Pensions Regulator within four months of your staging date. Details must be given of your qualifying workplace pension scheme and how you have gone about enrolling employees to the scheme.
There is a lot to think about and do when it comes to setting up your company pension. These tips give you a good starting point. However, if you have any questions about pensions or your business in particular, do get in touch.

Employment Law Changes – the next round!

Changes to employment law are made all through the year and they keep me very busy! As an employer, you’re expected to know which changes will affect your business and your staff. But how can you keep up with them all, when you have a business to run?
To help you out, every year I run a number of Employment Law Updates workshops, where we’ll talk through the latest changes and you can find out exactly how they will affect your business. The next one will be on 23 October 2014 at Hennerton Golf Club in Wargrave near Reading. I’ll write again soon to let you know more about this workshop and when you can book your place online.
T: 0118 940 3032 / 07889 607169
18 Ridgeway
RG10 8AS

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