Savings and Investments
Savings and Investments
Investing and Risk
Retirement Income Options
What are your duties?
When do you need to act?
1. Is there any way around the need to comply with all the employer duties?
As an employer, you must comply with all of your duties. The Pensions Regulator will be auditing all companies to make sure they are fulfilling their duties and there are substantial fines that may be levied against those that do not comply.
2. Will NEST fulfil my all my employer duties?
No. NEST is a pension scheme into which pension contributions from auto-enrolment can be paid and invested. However, there are employer responsibilities that must be carried out that NEST will not undertake on your behalf.
3. Do I still have to comply with the employer responsibilities if I have an existing pension plan?
Yes. You still have employer duties even if you have a pension scheme that meets the minimum requirements.
4. What penalties will I face if I don’t comply?
The Pensions Regulator will check employers are complying with the new rules. If you are found to be in breach of any of your responsibilities, you will be issued with a notice of enforcement. You will have the right to challenge that notice, but according to the outcome of the investigation, a penalty may apply.
Fines can be levied where companies have:
Failed to register with the Regulator.
Coerced their employees to opt out.
Failed to meet monthly contributions.
The values are shown in this table:
5. When would an employer use postponement?
As an employer, you have the right to postpone the enrolment of your employees for three months after the required commencement date of your scheme (also known as the ‘staging date’). This can reduce your costs significantly and there may be other benefits too. You may want to use the postponement facility for administrative reasons. For example, you may:
Need time to assess all of your employees.
Prefer to align the enrolment of employees with the payroll process, or avoid paying a part-month of contributions.
Want to avoid having to assess employees who are with you temporarily, or who have a one-off spike in earnings and would otherwise not qualify.
You are also able to postpone the enrolment of an employee for three months from the day they start with your company, or from the date an existing employee becomes eligible to join the scheme.
6. Is salary exchange permitted to meet the minimum contribution levels?
Yes. Salary exchange is where an employee can give up part of their salary or bonus to their pension fund, resulting in their gross salary being reduced and the employee paying less tax and national insurance. As an employer, you will make savings on your National Insurance bill, which you can then use to reduce your costs.
7. What are the minimum contribution levels?
The minimum contributions that you must pay into your staff’s pension scheme are being introduced gradually over time: