When you have so many other business issues to contend with, how can you ensure you successfully ride the pensions wave and avoid costly penalties?
Auditing is absolutely critical, and to help Johnson Fleming has compiled a checklist of key questions to ask yourself in order to help remain compliant.
Your auto-enrolment scheme
- Does your scheme offer a default investment option? This is required as your employees don’t need to make an active choice during enrolment.
- Are your records and documentation being maintained for the regulated period of time? Download our ‘How to change your auto-enrolment support options’ guide for more information on these requirements.
- Does your scheme fit within the annual management charge cap (0.75 per cent)? Is it free from active member discount pricing and member-borne commission elements? If you answered no to any of these, then your scheme is likely to be non-compliant so act now.
From the wording of your employee communications to who those engagements have been sent to, the world of communication is another potential breach area. Ask yourself:
- Do you have records of all communications sent to individual employees? It’s essential that you maintain a robust audit trail of every communication sent to every employee.
- Is the language you use persuasive or does it include inducements to opt out of the scheme? Avoid this or risk breaching regulations.
- Do your communications contain all the statutory information required? Visit the Pensions Regulator’s website where you can download template letters.
Assessment and contribution
Many breaches occur when employers wrongly assess employees, resulting in unpaid contributions. As an employer, it’s your job to determine who needs to be assessed and whether the contributions are correct. Ensure:
- You’ve assessed everyone in your business who needs to be.
- You’ve always taken the correct level of contributions.
- Any increases in National Minimum Wage levels are considered for employees contributing via salary sacrifice.
The upcoming changes to DC pensions may substantially change your existing scheme so ensuring your certification declaration is still accurate is critical. Bear in mind:
- If you have different rules for different employee groups, separate certification will be required.
- That the Pensions Regulator can demand to see a copy of your certificate at any time, so lock it away in a safe place.
- A certificate only lasts 18 months so you must allow time for renewal before its expiry date.
For a more detailed and extensive checklist, download our free guide, ‘How to… audit your auto-enrolment scheme compliance’.