Corporate financial planning Part 1. Auto enrolment and your business.


Running any small business is demanding.

On top of ensuring that you are getting paid and ideally make a profit, you need to deal with the taxman and with a list of rules and regulations that seems to get longer every year.

Fortunately, at Continuum we offer corporate financial planning alongside personal financial advice. It means that if you run a small business, you can rely on us for expert help.

In this first of a series of articles on corporate financial planning we are looking at Auto Enrolment – which is still proving challenging for many employers almost a decade after it was first discussed.

What are your responsibilities?

Auto Enrolment started to be phased in from 2012 as part of a government initiative to ensure that everyone in work could have an employer’s pension. Under the rules, eligible workers -which may mean practically everyone you employ full or part time – must be enrolled into a workplace scheme.

You need to have a workplace scheme, enrol staff onto it, and contribute towards it. The scheme must meet all the necessary standards, and you need to ensure you meet a range of legal and regulatory obligations – and deal with the costs.

As an employer you are required to setup a workplace pension scheme on the first day you employ someone who meets the automatic enrolment eligibility criteria. This date is called your ‘Duties Start Date’. To be eligible, employees must be aged between 22 and State Pension age, work in the UK and earn above £10,000 per year but this can be complicated by things such as bonuses and overtime and employees who are classified as non-eligible can still request to join the workplace pension. This means that you will need to contribute to their plan.

Book a free initial consultation

Book an initial consultation with one of our independent financial advisers or call us on 0345 643 0770 if you would like to discuss further.

What are the costs?

Auto Enrolment imposes two distinct cost burdens on your business. The first, obviously enough is your contribution. As an employer, the simple answer to the question ‘how much’ is that you are required to pay a minimum of 3% of each employee’s qualifying earnings’. These are calculated from gross pay, before income tax and National Insurance contributions are deducted, that fall between a lower and upper earnings limit of £6,240 to £50,270 for the tax year 2021/22. There are other calculations that you can use, which could reduce your contribution, although these can mean extra complications.

It is these complications that introduce the other cost factor – the time and expertise needed for administration.

Whatever line of business you are in, you are probably not a pensions expert and choosing and running your employees’ pensions is probably not a responsibility you might enjoy. The one thing you cannot afford is to make a mistake. The potential for large fines is very real.

Fortunately, at Continuum, we have the answers.

Finding the right provider

The default option for many employers is the government’s NEST scheme.  The National Employment Savings Trust (NEST) Corporation provides the NEST occupational pension scheme on a not-for-profit basis, to help employers offer suitable low-charge pension provision to workers.  However, there are many providers offering suitable schemes for Auto Enrolment and some may be able to offer potentially better performance than NEST.

At Continuum we can help you find the provider offering the best prospects for your pensions. After all, you are committed to substantial payments into the scheme. It makes sense to get the best returns on the money you and your team will be putting in.

Dealing with the administration

Adding pension admin to all your other paperwork is time consuming and a distraction from your core business. Fortunately, your payroll software provider may have a module that will simply plug in to your system.

Integrating pensions and payroll turns a complicated process into something very simple, reducing the administration and the chances of errors.

As experts in all aspects of pensions provision, we can support you in automating your system to deal with the administrative burden – as well as ensure that you meet all the requirements set by the legislation

Get help

Auto Enrolment needs to be a feature of all your business financial planning. You need expert help, not just with your employee pension obligations but for your wider financial affairs.

Pension planning means making complicated financial arrangements which will affect the future of your business and your employees. To get our experts working for you contact us today.

Fortunately, that kind of financial expertise is very easy to secure. Simply call us at Continuum for the advice you need.

The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable Pension products, you should seek independent financial advice before embarking on any course of action.

The Financial Conduct Authority does not regulate taxation advice.

A pension is a long term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Pension income could also be affected by interest rates at the time benefits are taken.

The tax treatment of pensions in general and tax implications of pension withdrawals will be based on individual circumstances, tax legislation and regulation, which are subject to change in the future.

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