Over 1 million organisations – each employing fewer than 50 people – must have a workplace pension in place between now and the end of 2017.
Learn what it means for your business.
Worryingly, most employers have found the process more difficult than they’d expected. Experts say even the smallest company could take up to 100 man days to prepare.
Time is money. 100 days = 800 hours. Even at minimum wage that’s over £5000. Preparation includes:
- Choosing a pension scheme
- Checking staff details
- Gathering missing information
- Communicating to staff
- Integrating with payroll
You may also need help from professionals such as a financial adviser, pension provider, accountant, or payroll service. The later you leave it, the higher their fees will be.
Factor this into your financial forecasts – you’ll need to stump up at least 1% to start with and by 2019, employers must give at least 3%.
Example: your employee earns £10,000. It’ll cost you an extra £8.33 per month. You’ll want to remember that when calculating pay rises!
If you don’t pay the correct contributions on time you risk an immediate fixed penalty of £400 and – if you still do not pay – an escalating penalty which accrues daily.
Workplace pensions are not a one-off effort.
- Employers (or their payroll agents) must continuously assess the workforce.
- Exchanging information with the pension provider every pay period.
- Reconciling and paying contributions.
These tasks will increase the cost of running your payroll.
Every employer must act. Don’t ignore Workie!