Currently, in the UK, we’re in the middle of the biggest change in retirement saving rules for many many years.
A change which will impact every employer and every employee across the country.
A change which is already impacting millions of employees and thousands of employers.
Although you might be fully up to date with this “change”, odds are you might also be one of the millions who know very little about it.
The change I’m talking about impacts how all of us work towards building the pots of cash we need to help look after ourselves in our later years.
This change is auto enrolment.
If you work for a large firm, you most likely know a bit more about auto enrolment than those of you who work for smaller businesses.
The key reason is that these rules are already being followed in most large and medium sized businesses. However with so many workers being employed in SME and Micro businesses yet to comply as they might not know anything about the change.
Whilst the changes are actually quite complex how they impact you (if you’re an employee) boils down to a number of key points:
1) For the first time your employer is obliged to offer you a pension and obliged to contribute
2) Most employees (including you) will be automatically joined, although they can decide to leave the scheme.
3) You should be notified of what you need to do by your employer (so in theory shouldn’t have to do anything until the rules impact your employer). However there’s no harm in, in giving your employer a nudge to confirm they are aware of the new rules and they have sufficiently planned to ensure they don’t break them.
If you’re an employer a little more action needs to be taken. Here’s three things, you need to be aware of:
1) The responsibility (if you’re an employer) in complying with these new rules sits with you. Whilst complying with the new rules can be relatively straightforward it can be done as long as you take enough time to plan, prepare, and take action. Also not complying should be ignored as an option. All it takes is a look at the fines the regulator can impose should put you as an employee off of ignoring this regulation.
2) This isn’t like any previous “pensions” regulation. It will need you (as an employer) to put a bunch of new systems in place, look at the communication between pensions, payroll, and even HR (together with employment law). It is obviously that both are going to create business expense (in pension contributions and the time it will take to comply on an ongoing basis) and will need to be prepared for in plenty of time.
3) The employers we’ve worked with who have complied with this regulation the best have had one particular asset in abundance. This ‘asset’ hasn’t been money…it’s been time! The employers where they have taken plenty of time to prepare have been able to take a good look at the challenge of auto enrolment, build a decent robust project plan and work towards the step they need to comply.
So, regardless of whether you’re an employee but especially if you’re an employer, it’s important to understand one thing
The auto enrolment train is already a decent distance down the track and as an employee but especially as an employer you need to find out now what you need to do to get on board.
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