From October 2012, by law, all small businesses will be required to contribute to their employees’ pension funds for the first time and automatically enrol staff members of staff into a pension scheme. Don’t panic initially, said Niel Cope for People Matters (HRC) Ltd, an HR provider specializing in supporting SMEs and Charities. The rules won’t affect most small companies initially and they will be phased in such a way that only bigger businesses will be effected this year, but the stages will affect every employer by 2017.
This isn’t something than you can bury your head about, a Business must comply with the changes or they risk substantial fines or even prison, if they fail to comply!
Employers must communicate the changes clearly with their staff and take advice to comply.
If you do not have a pension scheme in place, the Government has put in place the “Nest” scheme which is managed by Indian Giant Tata. Even if your staff do not want to contribute to a pension, the law requires you and them to automatically opt in, before they can opt out. A very time consuming and legally challenging prospect for any small business owner, coupled with the fact that this will increase the employers payroll expenses considerably.
The total individual pension contribution must equate to 8% of the employee’s salary and the employer will be required to pay 3% of that. In simple terms, any of your staff wishing to remain in the scheme will have to contribute 5% of their salary, but as a business owner you will have to give them the equivalent of a 3% pay rise.
An employer must keep records of any opt outs because they will be required to re-enrol employees on the three-yearly re-enrolment date.
As another layer of employment legislation with far reaching legal and financial consequences is just around the corner, you might want to consider hiring an HR provider to take on the responsibility for you. Human Resources (or People Management) outsourcing takes the stress out of day-to-day people and business management allowing you to concentrate on building your business and raising the funds to meet the latest government demands, whilst having the peace of mind that someone else is taking care of the details.
Niel Cope from Bury and Swinton based People Matters Ltd said: “Good HR consultancies will have been preparing for this major change, in the same way we are required to keep up with all employment law changes. They will be able to guide you through the minefield and ensure that you get the best advice. People Matters specialises in a very personal service as an extension to your business and we can help you plan for these and other changes. All new employment legislation, adds more pressure to business owners who want to get on with making a profit for themselves, their families and their employees are key to getting the country out of its current economic problems, without having to become an expert on employment law and pension changes. It’s all additional stress which for a very reasonable monthly fee can be managed for you, by hiring an HR Consultancy.
Auto-enrolment into pension schemes for all employees is one of the biggest employment changes in decades and you need professional support.
In conjunction with specialist Pension Advisors People Matters will be running short seminars in the future to inform you, dispel some myths and prepare you for the changes ahead, along with providing some free HR surgeries where you can get advice from Niel and People Matters Associates on your People Management issues.
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