Pensions – Auto Enrolment
This advice is for businesses that only have directors / company secretaries and have no employees.
What is Auto Enrolment?
Auto enrolment is the Governments way to ensure that employees are offered pensions and to encourage working people to plan for retirement. Auto enrolment has been designed to make sure that employers offer real pension schemes with real contributions – it is not a pension scheme itself but is a process by which all qualifying “jobholders” in employment are made members of a pension scheme.
An explanation from The Pensions Regulator:
What about JF Financial?
As accountants we do not typically get involved in pension advice which is usually provided by regulated financial advisors. However because this affects many businesses we want to make sure that our clients are educated on this reform and what needs to be done. If you would like contact details of a pension advisor who we work with see here.
Does my company fall within the scope of Auto-Enrolment?
To fall within the scope of auto-enrolment your company will have 2 or more “workers”. A “worker” is defined as an individual who holds an employment contract and earns over £10,000 per year.
This means directors or company secretaries without an employment / service contract are NOT classed as a worker, even if they earn over £10,000 per year.
Director only companies
As long as your company only has Director(s) and maybe a Company Secretary (directors and company secretaries are known as ‘officers’) and there are no other employees then as long as the officers do not have employment contracts or contracts of service (usually they won’t) then the company will fall outside of the scope of Auto Enrolment, see below.
My company falls outside the scope of Auto Enrolment, what do I need to do?
If your company falls outside the scope of auto enrolment you will need to confirm this by your auto enrolment deadline. This can be actioned using the below online form:
https://automation.thepensionsregulator.gov.uk/notanemployer
You should receive a response from the Pensions Regulator in due course confirming that your business is indeed outside the scope of auto enrolment and has been marked on their systems accordingly. Please diarise to check for this response and keep a copy of the response safely filed.
It is important that auto enrolment is considered when changes in the company occur. If changes lead to your company falling under the scope of Auto Enrolment then the Pension Regulator should be informed as soon as possible.
Is there a benefit to staying within the scope of Auto Enrolment even if we don’t need to?
There is no benefit of being in Auto Enrolment if you don’t need to be – you’d be better arranging either a personal or a company pension scheme in the traditional way.
My business falls within Auto Enrolment
If you think your business does fall within Auto Enrolment please let us know asap so we can advise as to the next steps.
What are the deadlines?
Every company has been issued with a “Staging Date” for Auto Enrolment. You can confirm this for your company by visiting :
http://www.thepensionsregulator.gov.uk/employers/staging-date.aspx
...and entering your PAYE reference. This is the deadline for your company to put auto enrolment into action so notification that your company is outside the scope of auto enrolment will need to be done by then.
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