4 reasons why your small business should forward plan for auto enrolment
The key is in the planning! It’s about getting your head around what needs to be done and when by. Devise a strategy and break it down into manageable chunks. You also need to ask yourself, do you try and muddle through this alone (‘face palm’ moment) or do you bring in an external specialist to help you? You have a day job too, remember!
So why should you forward plan and give yourself plenty of time?
1. You may need to first get your head around pensions. Many smaller employers have never had to think about pensions before. The auto enrolment legislation can be complex and confusing, even if you have offered a pension before. So it’s important to seek advice from those in the know, especially from those who have already helped larger often more complex businesses through this process. Experts can help you understand pensions, which in turn will help you better communicate the changes to your workforce – who ultimately probably know as little about pensions as you may do! It can be a massive educational piece and if done right can help engage and motivate your people… they have a pension now!
2. To understand the considerable amount of work (and time!) involved with this process. There are a number of factors that need to be considered, set-up, arranged, communicated etc etc. The last thing you need is a mad rush at the end, risk of fines and general chaos and mutiny from your co-workers. You also need to prepare for the additional admin burden and obligations once you have your pension scheme in place. Can your payroll software deal with this process? Do you need to look at additional technology to automate the monthly comms and qualifying process? How do you deal with opting people in and out, changes to eligibility? You need to factor all this into your day job and your internal budget. If you need a heads up in regards to what the planning stages look like, check out the Pensions Regulator website – here or Sign-up to our FREE one to one advice and guidance session.
3. Ensuring you have the best pension options for your business. If you currently have a pension scheme, you need to check to see if it’s compliant. If it’s not, you will need it to be. If you don’t currently have any pension provision in place, you will need to set one up in time for your staging date. Yeah, it’s pretty scary, especially if you’re new to pensions, the terms, dealing with providers, knowing what to ask, what is good and what isn’t! Insurance companies are under a lot of pressure at the moment (like employers) to get schemes ready in time. As the company sizes get smaller, the number of companies that are staging increases, which stretches the insurance companies capacity to set up new schemes, which means that many will close their doors to new companies. This could leave you with limited pension providers to pick from. The sooner you prepare and speak to providers, the sooner you can secure a pension with your pension provider of choice. Often the larger insurance companies provide free auto enrolment software, which means you don’t have to go out and find (and pay!) for your own! That’s one less things to worry about, right?
4. You need to understand the total cost! Sounds cliché .. but it’s true! This process will not only cost the business in regards to the pension contributions (which you may not have had to worry about before), but also your (and others involved) time – both setting up the scheme, the comms to employees and the on-going admin processes to ensure you meet your obligations and avoid fines (and even prison!!). Therefore, you need to seriously budget for auto enrolment and get a full understanding of the costs and time associated.
Luckily we at DGS Employee Benefits love making auto enrolment simple and easy to understand. It’s our life, so we take some of the burden away from you, leaving you free to get on with your day job. We’ve already staged larger businesses, so we know what you need to do, when by and what the hidden pitfalls can be!
So…..what are you waiting for?