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Review your pension arrangements

Posted by: edwinsmith on June 14th, 2014

Once you have carried out an initial assessment of your staff you will know which employees are eligible for auto enrolment.

If you have staff to auto enrol you will need to ensure that you have an appropriate pension scheme in place and then agree with your pension scheme provider what information they will need from you and when you will need to deliver it, in order to auto enrol your staff on time.

If you already have a pension scheme

You will need to ensure that it meets the criteria of an auto enrolment scheme.  You should also check that the scheme is good quality, for example it provides value for money and protects your staff’s savings. Click here for The Pensions Regulators guide on selecting a good quality pension scheme.

If you operate a defined benefit pension scheme you should contact the trustees to check whether your scheme qualifies.

If you operate a defined contribution pension scheme it may be used if it meets the criteria regarding minimum levels of contribution.  There are two main ways to check if a scheme may be used:

  1.  if it requires minimum contributions based on qualifying earnings, or
  2.  the employer self-certifies that it requires contributions in accordance with one of three sets of contributions.

For more detailed guidance on the above criteria and to see how the criteria apply to occupational pension schemes and personal pension schemes, The Pensions Regulator have published a tool on their website.Click here to launch the DC Qualifying schemes tool.

If your scheme qualifies or you are able to certify, you can continue to use it for existing members. If you want to use the scheme to automatically enrol your eligible jobholders from your staging date, then the scheme also needs to meet the automatic enrolment criteria.

To be used for automatic enrolment, the scheme:

  1. must not require the worker's consent to join
  2. must not require the worker to provide any information or make any choices to join or remain a member, eg submit an application form or choose a type of fund
  3. must allow a worker to join it from their first day of employment.

If your scheme doesn't qualify, or if it qualifies but doesn't meet the automatic enrolment criteria, it may be possible to amend the terms of the policy. To explore this option, contact your scheme provider.

If you do not have a qualifying scheme

If you can't amend the terms of the policy or you do not have a qualifying scheme, you will need to choose a new scheme that can be used for automatic enrolment from your staging date.

A financial advisor can assist you with finding a pension scheme provider.  When making enquiries and choosing a provider, you should consider the legal requirements of auto enrolment and the quality of the scheme.  Click here to see The Pensions Regulator advice on finding a provider including a list of questions to ask potential providers

It is important that the scheme you choose delivers good outcomes for its members. Click here for The Pensions Regulators guide on selecting a good quality pension scheme.

This is the sixth instalment in a series of articles regarding auto enrolment as detailed on our Employer Action Plan. Previous instalments detailed below:

1 – Know your staging date

2 - Nominate a contact

3 - Develop an initial plan

4 – Know your workforce

5- Check processes and software

For more information on pensions or to discuss your auto enrolment action plan please contact us.

 

Filed under: Auto enrolment, Business