Did you know that the law on workplace pensions has changed?
The Government introduced new legislation in 2012 making it compulsory for employers to enrol eligible workers into a workplace pension scheme and make regular contributions.
This is known as automatic enrolment or auto-enrolment.
Every employer must enrol workers into a workplace pension scheme if they:
- Are aged between 22 and State Pension age
- Earn more than £10,000 a year
- Are not already in a suitable workplace pension scheme
- Work in the UK
Where auto-enrolment applies it is compulsory unless an employee voluntarily opts out. The date by which you must comply with this legislation, the ‘staging date’ can be found on the Pensions Regulator website.
Does auto-enrolment apply to your business?
The law has come into force for large businesses but there’s some confusion around how it applies to small businesses – especially one-person operations, family firms and husband and wife teams. So here’s the lowdown.
Sole director
If you’re the sole director of a business and have no-one working for you, you’re off the hook as far as auto enrolment goes. However you must notify the Pensions Regulator that this is the case.
Husband and wife team
The situation for a husband and wife outfit is slightly more complex:
- If you’re both directors but only one or neither of you has an employment contract, you’re exempt from auto-enrolment.
- If one of you is a director and the other an employee, auto-enrolment will apply for the employee only.
- If one of you is a director and you both have contracts of employment, there will be automatic enrolment duties for you both.
Family business
If the whole family is involved in the business it gets even more confusing:
If you are all directors:
- If you all have employment contracts, the company will have automatic enrolment duties for you all.
- If at least two of you have employment contracts, auto enrolment applies for those that do.
- If only one of you has, or none of you has, an employment contractthere’s no requirement for auto enrolment.
If some of you are directors and some are employees:
- Auto enrolment will apply to all those that aren’t directors
- If at least two of you have employment contracts (whether directors or not) the company will have automatic enrolment duties for any director who has an employment contract.
We can help
If you’re unsure whether auto enrolment applies to your business (or if you’d like some help), please give Aspirations Accountancy a call on 01634 298238.
You can also find more about auto enrolment on the employment status section of the GOV.UK website.
