Becoming a business owner certainly has its advantages: take having greater control over your working day, coupled with the feeling that you’ve built something of your own – for many it’s all that’s needed to give up the life of an employee and become their own boss. But, running a business comes with some unavoidable responsibilities and legislative red tape. One of the biggest challenges facing small firms this year is workplace pension legislation – otherwise known as auto enrolment.
Under the Pensions Act in 2008, every employer in the UK must put certain staff into a pension scheme and contribute towards it. This affects every business large and small – within every industry. So whether you’re a hairdresser, an architect or personal care assistant, auto enrolment will affect you. Every firm has a date – known as a staging date – when their duties come into effect. For many small businesses (those with fewer than 50 employees) their staging dates will be between now and 2017. The key to effective auto enrolment staging is to be as prepared as possible, so you’re not panicking at the last minute. Failure to comply does come with its consequences, including fines from the regulator of up to £500 per day for smaller sized businesses. So it’s high time to make sure you’re ready and then it’s one less thing to think about!
For further information, take a look at our top tips on how to find your perfect pension provider.
Background of Auto Enrolment
In October 2012 the government introduced the requirement for all employers to enrol their employees into a qualifying workplace pension, without employees having to take any action. Known as auto enrolment, this change to workplace pension provision introduces a new set of regulations that employers need to comply with. The government estimates that around seven million people are not saving nearly enough for retirement, with many people not saving at all!
With life expectancy increasing, people are potentially facing up to 40 years in retirement and while the State Pension provides a safety net, it certainly isn’t enough for anything more than the basics. Auto enrolment therefore provides an additional layer of savings to help people have a more comfortable retirement.