Insights of Pension Auto-Enrolment
There are more than 5.2 million small businesses in the UK and out of that around 2 Million are limited companies.
Being a limited company, it is very likely and recommended that you register for payroll to employ staff and be tax efficient for yourself. The rules are now changing and every company with a payroll and employees will need to enrol for pension auto-enrolment.
What is Pension auto-enrolment
Government has introduced pension auto-enrolment for all the employers who have 1 or more employees working for them. Auto-enrolment is not an automatic thing for employers that happens itself, rather you need to set it up and it also makes you responsible for some ongoing duties & responsibilities. Auto-enrolment is automatic for employees, employer need to enrol all eligible employees for auto-enrolment and then it depends on the employee weather they want to opt out or want to continue with it.
Minimum contributions have also been decided by the authorities and the minimum is 1% by employer in year one and goes up to 3% in year three. There is also a minimum contribution from employees that also starts from 1% in year one and goes up to 5% in year three.
All companies have been assigned staging date and that’s the date when they will have to start auto-enrolment for the employees. You can find your staging date by going to pension auto-enrolment website. Employers will also receive a letter from HMRC 12 months before their staging date. It is recommended that employers act well before their staging date to find the best-suited pension scheme and supplier for the company.
Costs to setup scheme
You can choose and set-up a pension scheme yourself but a financial advisor could help you choosing the right scheme for your company. There are many companies out there offering pension enrolment setup and the average cost is about £500. It can be very helpful and advised by pension providers that you use integrated payroll system and pension system so that the information flows without any delay and in proper formats.