NW Brown writes:
From 1 October 2017 onwards, new employers have a duty to auto-enrol their first worker on the worker’s contracted start date.
Postponement of up to three months can be used in the normal way.
Minimum contribution increases from 6 April 2018
The first phase of increasing the statutory minimum contribution levels takes place on 6 April 2018 and the second on 6 April 2019.
The minimum employer contributions rates are just that. If your company has decided to pay more than the minimum, it may give you an advantage over a competitor employer when recruiting skilled workers.
Clearly, planning how to incorporate this additional cost within budgets and your remuneration strategy is best started as early as you can, to ensure the impact is understood by all those involved and managed as effectively as possible.
Member choice?
If a member does not wish to pay the increased contributions due in April 2018 and 2019 the scheme rules or terms and conditions may allow them to continue contributing at a lower contribution rate, or to reduce their contributions again after the increase.
This means they would continue to be a member of the scheme, but with contributions below the minimum level required by law, the scheme would not be considered to be a qualifying scheme for that individual. Their eligibility status would need to be considered when your cyclical re-enrolment occurs.
Depending on the scheme rules the member may no longer receive employer contributions.
Remember: An employer must not induce jobholders to reduce their contributions to below the statutory minimum level.
http://www.thepensionsregulator.gov.uk/docs/detailed-guidance-7.pdf (guidance notes 64-69)
We await clearer guidelines from pension providers as to how they will monitor lower contributions.
Spot Checks
The Pension Regulator is carrying out spot checks to ensure employers are complying with their duties – London, Greater Manchester, Birmingham and Sheffield have been targeted. Visits to other towns and cities across UK are expected.
We are informed that these checks are to highlight employers who have not taken steps to become or remain compliant and at the same time, understand any challenges employers are facing and identify where help can be given through improving guidance.
How can we help?
We offer a Corporate Governance and annual scheme review service. This includes reviewing your scheme administration quality and pension costs, your scheme provider performance review and your scheme default fund.
For more information, please contact one of our consultants on 01223 720 209.
NW Brown & Company Limited is authorised and regulated by the Financial Conduct Authority (191123).