Now this is a subject which is not only interesting, but very important in the pensions world. This is especially true if you are a small business as quite simply, you need to know about this!
So we asked our wealth partners, BrightCube Money Ltd, to impart their wealth of knowledge on the subject, which Ed Sayers was only too happy to do. See below for Ed’s words of wisdom, it is worth a read…
While many small businesses don’t need to formally stage for at least a year some firms are looking to put schemes in place early to help them phase in their future compulsory contributions and to give their staff a flexible opt-in period prior to the formal automatic enrolment that comes with the company’s staging date.
This adjustment period allows a company to get used to their new responsibilities and for the gradual engagement of staff – smaller businesses that are staging much later in the Auto-Enrolment process compared to the Country’s larger employers have far less time from their staging date until they are expected to be making the full required contributions, i.e. companies that staged in 2012 only needed to make a matched contribution of 1% from the employer and 1% from the employee compared to the basic minimum of 3% from the employer and 5% from the employee in 2018.
BrightCube has worked with a number of businesses (including estate agencies and digital design consultancies) who were not required to formally stage until late 2016 or beyond but have put a scheme in place ahead of their formal obligation. In one instance the firm will contribute 3% into the plan regardless of whether their employees wish to contribute as well.
Despite the fact that at this stage they were not required to contribute, engaging early with the staff has led to many matching the contribution with 3% of their own money and a few adopting the required contribution from them of 5% once the formal Auto-Enrolment process is completed.
“…while some small businesses are putting things off until the last minute there can be real value in being ahead of the game!”
By looking at this now, companies have a range of providers to choose from that potentially may not have offered them a scheme at their staging date due to the providers focusing on their existing business and maintaining their level of service standards. Every business in the UK will have received their staging date from the Pension Regulator and while some small businesses are putting things off until the last minute there can be real value in being ahead of the game!