Auto-Enrolment – Pitfalls and Problems

auto-enrolment

The government’s auto-enrolment changes have been introduced in small stages since October 2012, but companies have until 1st April 2017 to get to grips with the new regulations in their entirety. They essentially mean that businesses are obliged to enrol their employees into a company pension scheme automatically.

Auto-enrolment: Things to consider

It is worth noting the potential pitfalls that could be encountered on the road to implementation, so that they might be avoided if at all possible.

Take the scenario that a worker goes on maternity leave shortly after being automatically enrolled by her company. In this case, it might be thought that only the automatic enrolment legislation requirements need to be taken care of by the employer – but this is not the case. Experts believe that legislation related to equality would be applied to pension contributions in this case, in effect being overriding.

Another apparent falsehood would appear to be in the case that an employee benefits from tax protection of some sort – companies might wrongly believe that it is their responsibility when it comes to warning staff about the impact of automatic enrolment on their taxes. Companies should in fact ensure that any advice to their employees about the consequences of automatic enrolment in a pension scheme on their tax protection should be neutrally worded and that they should not draw attention to any particular tax consequences.

Counting down to the changes

The countdown to auto-enrolment changes being implemented completely starts now, and businesses are obliged to ensure they are aware of not only the legislation itself, but all the potential situations that they might have to deal with. That includes pubs and restaurants, who might never have had to deal with pension schemes at all in the past. The new changes will mean that auto-enrolment and its subsequent changes to the remuneration of employees become an integral part of payroll and the accounting associated with it. The guiding principle behind auto-enrolment should be applauded – we can all benefit by safeguarding our future and putting money aside for the later years in our life, and the changes look set to have the effect of encouraging more workers to look to the long term when it comes to their finances.

From its Keighley headquarters, BC Sunderland Driver makes it a priority to stay on top of all incoming legislation so that your business can ensure it meets its obligations. For more information and advice, contact us today.

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