5 Myths about Automatic Enrolment

Auto Enrolment has already begun for large businesses, and is just around the corner for small businesses. With not much time left, it appears that many business owners are worried and confused with what lies around the corner. In the article as well as our specialist edge (See above) articles we aim to take the stress of the unknown away.

The first common myth is that if you outsource your payroll then you do not need to worry about Auto Enrolment. This however is not true, as an employer you are legally responsible for making sure that you are compliant with Auto Enrolment. Information on what you need to do to prepare for Auto Enrolment can be found on our sister website at www.mintmis.com/auto-enrolment/. The pension’s regulator recommends that you allow yourself and your company from 12 to 18 months in order to prepare and implement the requirements of Auto Enrolment.

A second myth is that if you ask your payroll team to work extra hours, then you will have no need for change in your systems. With compliance a mandatory requirement of Auto Enrolment the new pension’s arrangements will have to be introduced into your system or indeed a new system. With new processes, you will likely find that the administration burden of additional record keeping and data submissions to the pension’s regulator may be a step too far for your current team, with all the new and added pressures. To help you save time and money you could look to payroll software that automatically complies to the Auto Enrolment legislation, for a closer look at such software see our sister website http://www.mintmis.com/sage-50-payroll/.

The third myth is that because it is believed that many people will opt out, that you do not need to have everything set up in time for your staging date. Scottish Widows recently conducted a survey that contradicts the original belief that as many as 30% of workers could opt out of Auto Enrolment. They found that only around 8% of people will be looking to opt out of the scheme. You are also as an employer, required by law to automatically enrol any eligible worker (Aged above 22 to 74, earning above £9,440 and working within the UK).

The Fourth myth of Auto Enrolment is that if you already have a pension scheme within your workplace, mean you don’t need to worry about Auto Enrolment as you can offer your employees this scheme. Auto Enrolment is part of the Workplace Pension Reform. If you are an employer within the UK then you are by law obligated to address your current scheme and compare it to the requirements of Auto Enrolment and make any changes that may be required to make sure that you’re scheme complies with the new laws. You will have new legal duties and conditions that you may find your existing scheme does not meet. You will also need to make sure you asses all of your employees eligibility for Auto Enrolment and not just those who are in your current scheme, as all eligible workers must be enrolled, and it is their decision if they choose to stay within the scheme or not.

The final myth is that you don’t need to start Auto Enrolment too early as you can use the 12 weeks postponement to gain extra time. Auto Enrolment will take you time to plan and prepare for, which is why we advise you do this well before you start your staging. Once you have made all necessary arrangements however, Auto Enrolment is manageable once you get to grips with it. Postponing Auto Enrolment will not necessarily make things easier for you and your payroll team to manage. There are certain rules that need to be followed and these could cause problems and more work, such as the obligatory letter you need to send your employees if you do choose to postpone, telling them you have postponed, and then once you begin to stage you must reassess your employees.

Don’t be held back and confused by mere rumours that you may hear. Putting off your responsibilities now will only mean hassle in the long run. There is no need to panic about Auto Enrolment; we have many useful resources on our sister website www.mintmis.com and in our up and coming newsletters including our Specialist Edge segments by David Perry from Alan Boswell Group. We also sell fully compliant software with the Auto Enrolment Legislation which can be found at http://www.mintmis.com/sage-50-payroll/.

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