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Confused By Pension Enrolment Changes? Our Expert Answers Your Questions

Last year, you might have seen Workie, a furry creature that hoped to raise awareness of the pension enrolment changes during the television ad breaks. Despite the Department of Work and Pensions spending £8.5 million on the campaign, Workie seems to have missed the mark, as it's found many small businesses remain confused by the pension changes.

Confused By Pension Enrolment Changes?

It's now been 4 years since the rules changed, but research by the Federation of Small Businesses (FSB) found that 45% of small and medium businesses in South Yorkshire were unclear of the rules and remained without a plan for employee's pensions.

Zee Hussain, Partner and Employment Law Solicitor at Simpson Millar's Manchester office, sheds some light on what the new pension enrolment changes are and how they could affect your business.

What is Pension Auto-Enrolment?

Pension auto-enrolment first became a requirement in 2012 when the law of workplace pensions changed. It has placed a new duty on employers to enrol their employees into a pension scheme.

With the larger firms now having already enrolled, it's now time for the 1.8 million small business owners to get involved.

The FSB study found that the majority of employers - 76% - are concerned about the costs and the impact the workplace pension will have on their business. Those that fail to comply could find themselves facing a £400 fixed penalty and a daily fine depending on how many employees you have.

George Millward, FSB regional chairman, has said;

"Our message for small employers is auto-enrolment is coming and will affect your business – and the sooner you get to grips with what you need to do, the better off you will be."

Which Employees Need to be Enrolled?

Whilst it's called Automatic Enrolment, this is only the case for employees; employers are under a duty to actively enrol employees into the chosen pension scheme. As an employer, you'll need to enrol employees if they:

  • Are aged between 22 and State Pension age,
  • Are earning more than £10,000 a year, and
  • Are working in the UK.

When Do I Have to Start Enrolling Employees?

The starting dates for employers to put in place automatic pension enrolment have been staggered, which is likely to have contributed to the confusion over the changes.

The first phase began in October 2012, with only the biggest businesses with over 120,000 staff beginning to enrol. Companies with less than 50 employees didn't have to begin enrolling until June 2015. The Pensions Regulator, the UK regulator of work-based pension schemes, is said to have written to employers letting them know when it's time to begin enrolment.

Our Specialist's Opinion

Zee comments:

"Whilst as a small businesses owner, you may be confused about how to begin getting involved or are worried about what these extra costs will mean for your business, you must remember that this a legal obligation; fines can be a huge setback for a small business. However for employers who engage with the requirements of auto-enrolment, there is certainly a positive story to relay to employees."

Zee is the founder and CEO of Simpson Millar's corporate HR outsourcing and consultancy service, HR Oracle.

HR Oracle offers business owners and managers complete certainty and peace of mind that your business is up to date with employment legislation, and we'll be here as your sounding board and support should any issues arise.

Our lawyers at Simpson Millar are experts in supporting business owners with legal issues or uncertainties. For support and advice, get in touch with our specialists.


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Dated: 08/02/2015

Author: Zee Hussain



Landlord - Residential Letting Contract


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