Pension pressure lifted for small businesses with part-time staff

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If you run a small business with only part-time staff then you might not need to have a pension set up by your staging date.

The Pension Regulator (TPR) seems to be hiding this fact – it’s not written down in any of the hundreds of pages of detailed guidance. But we’ve spoken to TPR and it confirmed our suspicions that if you employ only entitled* or non-eligible** staff then you don’t have to have an auto enrolment pension scheme set up by your staging date.

This will come as a huge relief to small business owners, payroll bureau staff and anyone else currently grappling with the confusing pension rules. And will save small business owners time and money as the average pension can cost around £250 to set up.

You will only need to have a pension by your staging date if any of your staff are between 22 and the State Pension Age and earn over £10,000 a year.

If they’re earning less than this then the pressure is off. You’ll still need to assess your employees at the staging date and let them know about auto-enrolment and their right to opt in.

But if an ‘entitled’ employee asks to join a scheme you have as long as you like to set it up and you won’t have to pay into to it. And if a ‘non-eligible’ employee opts in then you’ll have six weeks to set the scheme up following the next pay reference date after the date that employee has opted in. You will also have to contribute to the pension scheme.

*Entitled employees have the right to join a scheme but you don’t have to contribute

**Non-eligible employees have the right to opt in and you have to contribute

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About Author

Hayley Whitten

Hayley is managing director of Frome-based Biznus Payroll. The company was established in 2001 and provides a professional payroll service to small businesses throughout the UK. Hayley is a self confessed auto-enrolment geek and is continuously assessing the most cost effective ways to administer the burdensome legislation for SMEs. Having advised her existing clients, answering their auto-enrolment questions and helping them to meet their pension obligations, she’s now well placed to comment on AE issues that are already causing headaches for small business owners. Hayley can be contacted at Biznus Payroll on hayley@biznuspayroll.co.uk or visit www.biznuspayroll.co.uk

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