Its Halloween – scary stuff I’m about to tell you

Pension – auto enrolment – get your head out of the sand right now.

Most of the blog posts here are driven by a client query or question. However I am not asked that often about pensions, so I am driving this one. and its about Pensions – very exciting I know but it is Halloween so read on regardless and be afraid, be very afraid.

Bottom line is this, all employers big or small need to have set up a pension scheme by the very latest 1 April 2017. No if buts or maybes.

So you all need to be thinking about pension – auto enrolment NOW!

In a short sentence, all UK employees over the age of 22 and up to the state pension age, earn more than £10k per annum in all workplaces need to be automatically enrolled in a workplace pension scheme unless they choose to opt out. Its the law so no getting around it.

If you have a workplace pension scheme and you already contribute to ALL of your employees pensions then read no further, however you will have to automatically enrol every employee unless they choose to opt out.

Will it cost employers?

You betcha

So how much is all this going to cost me, well the law says a minim percentage of your ‘qualifying earnings’ must be paid into your workplace pension scheme.

‘Qualifying earnings’ are either:

  • the amount you earn before tax between £5,824 and £42,385 a year
  • your entire salary or wages before tax

You as the employer chooses how to work out an employee’s qualifying earnings.

The minimum an employee  pays The minimum you the employer pays The government pays
0.8% of their ‘qualifying earnings’ rising to 4% by 2018 1% of the employee’s ‘qualifying earnings’ rising to 3% by 2018 0.2% of the employee’s ‘qualifying earnings’ rising to 1% by 2018

If an employer offers a defined contribution scheme, the minimum amounts can go up in October 2017 and October 2018.

The minimum amounts could be higher for employees or your employer because of each companies pension scheme’s rules. They’re higher for most defined benefit schemes.

In other schemes the employee and you the employer have the option to pay in more than the legal minimum. An employee can pay in less – as long as you the employer puts in enough to meet the legal minimum.

This really is a minefield and I suggest those of you who have not even thought about pensions yet as you may believe ‘you are too small’ then you need to contact a financial adviser and get one in place. NOW!

This rather scary looking staging chart shows the dates you need to have a pension scheme in place.

These two websites are very helpful

www.gov.uk/workplace-pensions

www.thepensionsregulator.gov.uk

Don’t ignore it, CLICK on those two links and act.

You have been warned!

Staging dates by PAYE scheme size or reference

PAYE scheme size or reference Staging date
120,000 or more 1 October 2012
50,000-119,999 1 November 2012
30,000-49,999 1 January 2013
20,000-29,999 1 February 2013
10,000-19,999 1 March 2013
6,000-9,999 1 April 2013
4,100-5,999 1 May 2013
4,000-4,099 1 June 2013
3,000-3,999 1 July 2013
2,000-2,999 1 August 2013
1,250-1,999 1 September 2013
800-1,249 1 October 2013
500-799 1 November 2013
350-499 1 January 2014
250-349 1 February 2014
160-249 1 April 2014
90-159 1 May 2014
62-89 1 July 2014
61 1 August 2014
60 1 October 2014
59 1 November 2014
58 1 January 2015
54-57 1 March 2015
50-53 1 April 2015
Fewer than 30 with the last 2 characters in their PAYE reference numbers 92, A1-A9, B1-B9, AA-AZ, BA-BW, M1-M9, MA-MZ, Z1-Z9, ZA-ZZ , 0A-0Z, 1A-1Z or 2A-2Z 1 June 2015
Fewer than 30 with the last 2 characters in their PAYE reference number BX 1 July 2015
40-49 1 August 2015
Fewer than 30 with the last 2 characters in their PAYE reference number BY 1 September 2015
30-39 1 October 2015
Fewer than 30 with the last 2 characters in their PAYE reference number BZ 1 November 2015
Fewer than 30 with the last 2 characters in their PAYE reference numbers 02-04, C1-C9, D1-D9, CA-CZ or DA-DZ 1 January 2016
Fewer than 30 with the last 2 characters in their PAYE reference numbers 00 05-07, E1-E9 or EA-EZ 1 February 2016
Fewer than 30 with the last 2 characters in their PAYE reference numbers 01, 08-11, F1-F9, G1-G9, FA-FZ or GA-GZ 1 March 2016
Fewer than 30 with the last 2 characters in their PAYE reference numbers 12-16, 3A-3Z, H1-H9 or HA-HZ 1 April 2016
Fewer than 30 with the last 2 characters in their PAYE reference numbers I1-I9 or IA-IZ 1 May 2016
Fewer than 30 with the last 2 characters in their PAYE reference numbers 17-22, 4A-4Z, J1-J9 or JA-JZ 1 June 2016
Fewer than 30 with the last 2 characters in their PAYE reference numbers 23-29, 5A-5Z, K1-K9 or KA-KZ 1 July 2016
Fewer than 30 with the last 2 characters in their PAYE reference numbers 30-37, 6A-6Z, L1-L9 or LA-LZ 1 August 2016
Fewer than 30 with the last 2 characters in their PAYE reference numbers N1-N9 or NA-NZ 1 September 2016
Fewer than 30 with the last 2 characters in their PAYE reference numbers 38-46, 7A-7Z, O1-O9 or OA-OZ 1 October 2016
Fewer than 30 with the last 2 characters in their PAYE reference numbers 47-57, 8A-8Z, Q1-Q9, R1-R9, S1-S9, T1-T9, QA-QZ, RA-RZ, SA-SZ or TA-TZ 1 November 2016
Fewer than 30 with the last 2 characters in their PAYE reference numbers 58-69, 9A-9Z, U1-U9, V1-V9, W1-W9, UA-UZ, VA-VZ or WA-WZ 1 January 2017
Fewer than 30 with the last 2 characters in their PAYE reference numbers 70-83, X1-X9, Y1-Y9, XA-XZ or YA-YZ 1 February 2017
Fewer than 30 with the last 2 characters in their PAYE reference numbers P1-P9 or PA-PZ 1 March 2017
Fewer than 30 with the last 2 characters in their PAYE reference numbers 84-91, 93-99 1 April 2017
Fewer than 30 unless otherwise described 1 April 2017
Employer who does not have a PAYE scheme 1 April 2017
New employer (PAYE income first payable between 1 April 2012 and 31 March 2013) 1 May 2017
New employer (PAYE income first payable between 1 April 2013 and 31 March 2014) 1 July 2017
New employer (PAYE income first payable between 1 April 2014 and 31 March 2015) 1 August 2017
New employer (PAYE income first payable between 1 April 2015 and 31 December 2015) 1 October 2017
New employer (PAYE income first payable between 1 January 2016 and 30 September 2016) 1 November 2017
New employer (PAYE income first payable between 1 October 2016 and 30 June 2017) 1 January 2018
New employer (PAYE income first payable between 1 July 2017 and 30 September 2017) 1 February 2018

Information taken from www.gov.uk/workplace-pensions