Following the major changes in pension saving, which were announced in October 2012, it is now approaching the time that smaller employers, like golf clubs, are required to have a pension scheme in place that automatically enrols eligible workers.
This is called Auto-enrolment, and employers and employees are both required to contribute to the pension. Currently the total minimum contribution is 2% of employee earnings with 1% coming from the employer and 1% from the employee (0.8% contribution plus 0.2% tax relief). These contributions are set to rise to 5% (2% – employer, 2.4% plus 0.6% tax relief – employee) from October 2017. Then from October 2018 onwards the contribution will rise to 8% (3% – employer, 4% plus 1% tax relief – employee).
The scheme is designed to encourage more people to save for their retirement, and it is mandatory. By law all employers, even those with only one employee, will have to set up a pension scheme to enrol their employees into. Even if you already operate a pension scheme this will have to be reviewed to ensure it complies with auto-enrolment. All employees aged 22 and over, and under State Pension age, who currently earn over £10,000pa (2015/16) and are not already in the employer’s pension scheme must be enrolled.
The deadline for the introduction of auto-enrolment will depend on your staging date and you may have already received a letter confirming it. Otherwise, it can be checked with the Pensions Regulator. This date will depend on the size of your club and many of the larger facilities may have already completed the process.
Prior to your staging date you need to select a suitable pension scheme or review any pension scheme you have currently in place to determine if it meets the new criteria and, if it does not, implement the changes required.
Then, on your staging date, you need to inform your employees about how Auto-enrolment affects them, automatically enrol eligible workers (who may then choose to opt out) into the scheme and then invite non-eligible workers to opt in if they wish. To see which categories your employees fall in to then follow this link to the Pensions Regulator’s website.
Following your staging date you must complete a declaration of compliance, maintain records, continue to enrol employees, ensure the correct contributions are paid and re-declare compliance every three years.
With the introduction of automatic enrolment, the requirement for an employer to provide access for staff to a stakeholder pension scheme has been removed to avoid employers being subject to overlapping duties.
If you do not comply with your employer duties The Pension Regulator has the power to take action against you. This includes a fixed penalty notice of £400 with escalating penalties starting at £500 per day, along with penalties against those who persuade employees not to join or to opt out; culminating in imprisonment for wilful failure to comply. More information can be found here on this page of the Pensions Regulator’s website.