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Top 10 tips for successful pensions enrolment for construction employers

The government wants all workers, including those in the construction sector, to be able to save into a pension scheme for their retirement. 

By 1 February 2018, all employers must automatically put current workers and new joiners into a pension scheme and pay contributions.

Here are the top 10 tips to help employers in the construction industry understand and comply with the automatic enrolment requirements:

1) Know your staging date – the implementation day for your business. Automatic enrolment is being phased in, starting with the largest employers.

Those with 60 workers had a staging date of 1 October this year. Check your staging date by entering your PAYE reference number on the Pensions Regulator’s website.

2) Understand what you need to do. Remember workers have the right to opt out of the scheme but only after they have been put into it. You must not do anything to encourage them to opt out.

3) Start planning early. Do not underestimate the amount of time it will take to comply with automatic enrolment requirements.

The main compliance challenges are practical and administrative. Put an action plan in place and allow at least six months to prepare for your staging date.

4) Understand how your workforce is affected. You may have varying responsibilities to different sections of your workforce.

Automatic enrolment applies to ‘workers’, not just employees, and the definition is wide enough to include some fixed-term contract, agency (depending on who pays them) and offshore workers.

Existing workers and new joiners only have to be enrolled if they are aged between 22 and state pension age, and if their earnings are £10,000 or more a year (£192 per week). Other workers may be able to opt in.

5) Understand what pension – if any – and payroll arrangements – internal or outsourced – you have. If you do not already have a pension scheme, you will need to put a scheme in place.

The National Employment Savings Trust (Nest) is available to provide a compliant scheme if you struggle to find another provider.

You must also ensure your payroll arrangements are compliant and can identify when workers must be automatically enrolled.

6) Decide how you want to comply with auto-enrolment. Do you want to take a ‘minimum compliance’ approach and pay the default minimum contributions (currently 1 per cent for employers and members) and only enrol eligible jobholders?

Do you want to maintain the existing contributions and arrangements - which may be more generous - if they meet the auto-enrolment requirements?

7) Communicate clearly with your workforce in writing – this can be by email. There is a lot of information which you need to give to your workers.

The Pensions Regulator has templates to help employers comply.

8) Remember to register your scheme with the Pensions Regulator within four months of your staging date. Maintain a clear and accurate record of your ongoing auto-enrolment compliance. 

The Pensions Regulator can impose escalating penalties for non-compliance with automatic enrolment requirements.

9) Help is at hand. The Pensions Regulator provides useful guidance for employers. Your current advisers may also be able to help.

In addition, there are a number of specialist consultants who can advise on auto-enrolment compliance.

10) Finally, remember that getting past your staging date is not the end of the story.

You must continually monitor your workforce to ensure automatic enrolment compliance. Do not forget that every three years you will need to undertake a re-enrolment exercise.

Ruth Bamforth is a barrister in the pensions team at law firm Gordons

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