If you have become an employer or are becoming an employer for the first time post 1 October 2017, be it as a new business venture or expansion, pension duties become a legal requirement immediately for you and your new workforce.
This is in contrast to existing businesses who benefited from the comparative luxury of being notified by The Pensions Regulator of their staging date up to 12 months before duties became due, allowing adequate time to consider if a pension scheme is required and if so, how to best structure this.
This would include making key decisions regarding which of the four very different certification bases to use, what level of contributions to provide, which of the abundantly available pension providers to use and how to best communicate this to the workforce – never mind how to best manage the day-to-day administration involved!
Instead, when putting your new business aspiration into fruition, a workplace pension scheme should be at the forefront of your mind as duties apply from the first day a member of staff starts working for you; known officially as your duties start date. This must be viewed as an essential step in preparing to take on staff, similarly to registering with HMRC as an employer or taking out liability insurance.
The minimum an employer must contribute to an employee’s pension plan is currently 1% of their gross salary, which increases to 2% from April 2018 and then 3% in April 2019. This assumes that the employee does not choose to “opt out” of the pension scheme and continues to contribute the minimum employee contribution.
Penalties for falling foul of these duties can be rather severe with escalating penalty notices being issued automatically, with continued and willful non-compliance potentially resulting in criminal prosecution.
For further information on this topic contact Michael O’Brien here.