Auto enrolment is a government workplace pension scheme to help more people save for their retirement – into a pension. It’s now compulsory for employers to enrol all eligible employees automatically in a workplace pension scheme. Employers are also obliged to contribute to the scheme.
It’s good all round. Your employees win as it gives them increased financial security later in life. And it’s good for small businesses too, as offering that additional security will reduce staff turnover.
However, even though auto enrolment is a good thing, it may still seem a bit daunting for small business owners. Understandably, as you’ll see.
If your employees earn less than £10,000 per annum or they are under 22 years old, then you don’t have to provide a pension scheme for them. Employees can also choose to opt out if they wish, but you as an employer have no influence over this.
How much money are we talking about?
Currently, total contributions stand at 8% broken down as follows:
You must contribute 3%
The government provides 1% tax relief
The remaining 4% is paid by the employee
As an employee incentive, it carries comparatively little expense for you. And by contributing to employee pensions, you’ll also lower your National Insurance bill.
Contribution rates change periodically, so it’s crucial to stay up-to-date with government guidelines.
What else do I need to do?
Assess the eligibility of all your staff at every pay period
Set up and register an auto-enrolment approved pension scheme
Make contributions for, and enrol, any employees who are not eligible but wish to join the scheme
Enrol and make contributions for all eligible employees, at every pay period
Manage the automatic enrolment
Keep records of what you’ve done
That’s a lot of extra work, and confusion, when what you really want to do is concentrate on running your business. And the future of your business is dependent on your ability to manage your accounts and keep an eye on spending.
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How can I make the process easier for myself?
Fortunately there’s an accounting software solution that can make this whole process much, much easier. QuickBooks Online Payroll helps you manage payroll, calculate pension contributions, and keep tabs on inventory and supplies. Your accountant can continue to support you, but you won’t have to pay for his or her time to manually run your payroll. Much better to use it for tax or other advice.
QuickBooks Online takes all the stress out of payroll. No need for you to do anything. QuickBooks looks at your employees to see if they qualify for enrolment. It calculates your contributions, and theirs, and deducts these from the payslips.
What about NEST?
If you’ve chosen NEST (the workplace pension set up by government) as your pension provider, QuickBooks will generate reports that you can upload directly to NEST’s pension portal.
What other help is there?
QuickBooks software also includes marketing tools, merchant services and training solutions, all of which can free up your time so you’ve more time for focusing on other aspects of your business.
We hope you’ve found this article useful. QuickBooks Online Payroll is here to ensure that you are always on top of how much you owe your employees, HMRC, and your pension provider