Although the government’s auto enrolment pension scheme has been widely publicised, many companies remain unsure as to how exactly the changes will impact on them and their everyday operation. The plans, started in 2012, are intended to supplement hundreds of thousands of workers’ future pensions by forcing employers to contribute a set amount to their workers’ retirement funds. But as it stands, increasing numbers of companies are failing to comply with the new regulations and are therefore leaving themselves open to financial penalties as a result. So what exactly do businesses need to know?
Understand the Rules and Regulations
For all businesses, the best place to start is by looking at the finer details of the rules and regulations the government has put in place. This can be particularly time-consuming for small and medium-sized enterprises that are perhaps without a dedicated payroll department. However, auto enrolment compliance is essential if heavy financial burdens are to be avoided. Advice can be found at gov.uk/workplace-pensions/about-workplace-pensions, and the more a company knows, the better prepared they can be to integrate the changes into their own business.
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Be Prepared
Once the ins and outs of the government’s rules have been understood, businesses can begin to really consider the practicalities of making sure regulations are met without impacting negatively on their day-to-day operations. The authorities have attempted to keep all small and medium-sized enterprises well aware of the need for auto enrolment, but companies would be advised not to leave things until the last minute. To avoid any unpleasant surprises, business leaders should consider trialling any intended changes to see how they impact on finances and productivity before the deadline for their particular company arrives.
Avoid Simple Mistakes
It has been suggested that many companies have failed to properly prepare for auto enrolment because of an assumption that any existing pension schemes negate the need for the new government scheme. However, this is simply not the case. Bosses who already provide for their workers in such a way should of course be applauded. But consulting an auto enrolment guide could help them make sure that a switch between current methods and government-prescribed methods is handled correctly and accurately. Some specialist providers also offer online auto-enrolment systems which can greatly simplify the process of ensuring compliance.
Don’t Run the Risk of Getting Fined
With many larger businesses already very much into the swing of auto enrolment, the spotlight is well and truly falling on their small and medium-sized counterparts. But with statistics showing that over 150 companies have received £400 fines and nearly 1150 have been sent notices of compliance, smaller businesses would well advised to avoid the errors others have encountered.
With its high-profile advertising campaign continuing to receive air time, the government has seemingly done as much as it can to keep companies informed. Now it is up to business leaders to play their part by being fully prepared for the changes on the way. After all, the financial implications of not doing so are simply not worth the risk for bosses, workers and the company as a whole.
