How does the government’s Pension auto-enrolment scheme affect you, as an employer of domestic and/or household staff? The short answer is, that it all depends on the numbers of people you employ.
It has been a legal requirement for employers to enrol eligible employees automatically into a pension scheme and to make a minimum level of contribution since 2012. Alternatively, the employer can provide a minimum level of benefits where there are defined pension schemes in place.
The scheme is being phased in gradually, starting with larger companies, the dates having already passed for large and medium-sized companies.
At the smaller end of the payroll scale, two terms are used: employers with 5 – 49 employees are termed Small organisations and those with 1 to 4 employees are termed Micro-employers.
Deadlines for both of these groups started in 2015 and will continue until the beginning of 2018. Employers can obtain their exact staging date from the Pensions Regulator.
It will pay you to be aware of the dates and your obligations, as there are daily penalties for non-compliance. For payrolls of micro-employers, the penalty is £50 per day and for Small organisations, the penalty is £500 per day.
The scheme appears to be gaining ground, with 66% of all UK employees enrolled in a workplace pension in March 2016 compared with 47% in 2012.
However, actions against non-complying organisations has increased by 306%,according to the industry watchdog, The Pensions Regulator, as smaller employers are required to sign their staff on to pension schemes.
Enforcement action rose to 8,812 occurrences in the year to March 2016, up from 2,169 the year before.
In the report the Pensions Regulator attributes the increase in enforcement to smaller employers inevitably being less prepared. That, in itself, carries the message which you as an employer must take on board.
Be prepared, have plans in place and ensure they are enacted before the cut off dates.
As always we would recommend taking professional relevant advice in this planning and implementation.