Having a bit of a nightmare trying to find things regarding Auto Enrolment - for when they don't need to be auto enrolled but can opt in.
1] Employer has one employee (over 22 y/o) but they know in advance this person doesn't want to opt in. They are above £112/week but below £192/week. From my understanding the Employer may have to provide a pension which they also have to contribute towards. Is there a basic template letter. The template letter I've seen goes in to great detail with % amounts for employee and employer. This isn't going to apply but they are still legally obliged to write to the employee.
2] Employer has about 20 employees all of them earning under £112 per week. Again, my own understanding is the Employer may have to provide a pension but this time is under no obligation to make contributions towards it. Again, is there a basic template letter saying a pension will be made available if required. None of them are likely to opt in.
In both cases there is no point in setting up a scheme but I'm looking for template letters that will cover them.
Or can I invent my own letter - what is the minimum that needs to go in the letter....
Dear Employee,
If you want a pension scheme - call me on 01234 567890.
Yours sincerely,
The Boss.
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Never buy black socks from a normal shop. They shaft you every time.
My understanding is that in both cases you will still need a pension in the background even if nobody opts in/everybody opts out. There are a few exceptions to this, e.g. director only companies can usually get exemption but you still have to go via the TPR site I believe (not done this yet myself).
If that long boring template letter has the relevant information and lots more then use it. In my experience no one seems to read them and if the letter is offering the employee an option to opt in either as an eligible worker or an entitled worker and no action is taken then that's fine, you have satisfied your obligations there. Keep a record of the correspondence, even better if you email the letters so you can prove you have sent them. Don't forget if people have opted out then on the third anniversary of the staging date you send more correspondence inviting them to opt in, another reason why you need the 'dormant' scheme in place. Whilst NEST are still free to set up it may be your preferred option here.
The problem with the long boring letter was it still needed a lot of editing - for someone they knew didn't want a pension.
I was going over the pension rules with an accountant this morning and we came to the conclusion that no pension scheme was needed to be started up - unless the employee then wanted a pension scheme.
Before this morning I was actually going to take advantage of that three year rule. Suggest paying the employee extra in one month so they are auto-enrolled, they then opt out and that's you safe for the next three years. The employer would take responsibility of paying the employees contribution they wouldn't normally have to pay.
This really is OTT legislation. Not the providing of a pension - but the hoops you must go through when they don't want a pension.
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Never buy black socks from a normal shop. They shaft you every time.
Their website isn't exactly helpful for general enquiries so I'll probably end up with the same problem when I phone them. If I go to "Duties Checker" I have to give them the 10 digit reference from their letter. But it is a general enquiry so no letter. Their wording is atrocious.
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Never buy black socks from a normal shop. They shaft you every time.
Hi Guys
I was invited to a seminar which would enlighten me on all this next week in Chester. Unfortunately I just cannot spare the time to go, had it been local it might not have been so bad. But, I was chatting to a client the other day who has several businesses and he had been on one such seminar. I dont do his payroll (deliberately as its a cafe and weekly paid staff!). I know he pays more than the market rate to his staff and his turnover levels arent that massive, but he does get some churn. He told me that before the seminar his understanding was that he didnt need to set up a pension if he knew they were all opting out, BUT he was told that isnt the case - you have to set up the pension (and incur the set up admin fees!) and that staff can only opt out after everyone is automatically opted in (with the employer paying the first contribution into it!) Then everyone might opt out but that first months money is in the pot. Now each time he gets a new member of staff he has to do that first contribution.
Ive no idea if this is correct as Ive not had any stage yet, all are still some way off and Ive been burying my head in the no Im not gonna read up on it just yet as I dont need to. Gladly be corrected. In which case I will inform him too because as it stands he is thinking of getting rid of that business so he doesnt have to deal with all the hassle!
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I don't have any problem with those that are auto-enrolled (ie those that are over £192 per week) - it is the ones below that figure. The ones that can opt in if they want to. I've had one already where they knew in advance the person was opting out but had to go through the process of setting up a scheme, auto-enrolling them, making a deduction, have the employee opt-out then refund the money deducted. That scheme will sit there doing nothing for three years and they go through the stupid process again.
It is the ones that aren't auto-enrolled I have the bother with.
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Never buy black socks from a normal shop. They shaft you every time.
Ive no idea if this is correct as Ive not had any stage yet, all are still some way off and Ive been burying my head in the no Im not gonna read up on it just yet as I dont need to. Gladly be corrected. In which case I will inform him too because as it stands he is thinking of getting rid of that business so he doesnt have to deal with all the hassle!
I wonder how many other business will close down for similar reasons. It isn't the extra tax that is the problem - it is the over the top paper work associated with this legislation.
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Never buy black socks from a normal shop. They shaft you every time.
I agree with your view - if all the workers are Entitled Workers (under £112 p/w) or Non-eligible Jobholders (between £112/£192 p/w or aged 16-21 or SPA to 74) you do not have to have a scheme in place. However, you would have to get it in place quickly if one of them opts in!
I have a letter, which I would say is fairly brief for 'not auto-enrolled' employees - although considering your suggested one, you may still think mine's too long!! Will try to email it to you - failed, can't find an email address for you!! Have attached it to this, hopefully!
Helen
-- Edited by Helz on Thursday 12th of May 2016 07:07:44 PM
I don't have any problem with those that are auto-enrolled (ie those that are over £192 per week) - it is the ones below that figure. The ones that can opt in if they want to. I've had one already where they knew in advance the person was opting out but had to go through the process of setting up a scheme, auto-enrolling them, making a deduction, have the employee opt-out then refund the money deducted. That scheme will sit there doing nothing for three years and they go through the stupid process again.
It is the ones that aren't auto-enrolled I have the bother with.
Hi Stuart
I must apologise profusely and will admit to not reading your question properly!
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I can confirm that if any employees who are not be automatically enrolled on the staging date then you do not need to have a pension set up. If you have any employees who are non eligible job holders and they wish to opt in then you will have to set up a scheme. Also, If you use Moneysoft they have letters which you can print or email that are straight to the point and easy for the employees to understand.
Don't forget though that you still need to complete the Declaration of Compliance no matter what category the employees come under
Yes , I've done a couple with another one next month and one in October.
Its the set up that takes the time, discussing with client how it all works, explaining the different types of workers , who is automatically enrolled and who isn't and the cost to the employer. I registered with NEST as delegate so can set up the scheme for the client.
I've only had one person opt out so far, everyone else who was automatically enrolled has stayed in. And I've had one opt in who was a non eligible . You only need to send a letter on your staging date to the employees , explaining whether they've been AE or not. On a daily, well monthly basis it only takes 30 minutes .
First you need to price the initial set up, this takes the time like I mentioned talking with the client etc. I remember the first event I went to regarding AE and felt overwhelmed as I hadn't got a clue and it seemed like a mammoth task. So you have to remember this when you price your work. It's not all about how long it takes its also about the time spent at events, reading, researching etc and your knowledge. Remember your clients won't have a clue and are relying on you to walk them through so this ...so charge accordingly.
Also, factor in the extra time it takes each month (30mins when your up and running) and include any eventualities like opt outs and opt ins.
I've not had any stage yet mine are all next year and am not sure what I am going to do yet about charging etc.
Had an interesting meeting with an IFA this week - was discussing our personal finances but as she knows what I do so we got chatting about AE.
She told me, if someone has taken out the individual protection because their pension pot has reached the lifetime allowance and they change jobs there is a potential problem for them. If they are enrolled - even if they then opt out they lose the protection. That means they have to be proactive and notify a new employer prior to any AE so they are not enrolled. Then of course due to the 3-year life cycle they have to keep renotifying. Not sure what happens when the time is up and the compulsory enrollment happens. Seems like a minefield to me as how many people would know that. Admittedly its not going to affect 1000s but it will affect some.
Hi Georgie
Thanks for that and it matches with my rough pricing, so that's good. I went to a AAT seminar in March which was really good but none of my clients stage til next May so I'm just getting myself ready for it all. I haven't given much thought to the set up costing so thanks for the advice there.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
