Matter of urgency
Landlords need to prepare for pension changes, or face the risk of major penalties, says Sasha Butterworth
Under measures that come into force in October, UK employers, irrespective of size and including social landlords, will for the first time have a legal obligation to automatically enrol eligible jobholders into a qualifying workplace pension scheme. Employers who do not comply face escalating penalties of up to £10,000 per day as well as criminal penalties.
Employers need to understand the nature of their obligations and the safeguards in place to protect employees, meaning that employers and employees will be required to make mandatory contributions, that along with tax relief will total 8 per cent of an employee’s earnings between an upper and lower limit, currently set at £5,500 and £42,500. The new employer duties will take effect on each employer’s staging date, which will be determined by the size of its largest PAYE scheme.
Given the new requirement to make employer contributions, it is likely that employers will notice an increase in annual pension costs and they will need to take these additional costs into account when preparing future budgets and forecasts. Employers will also need to review their employee records, systems and procedures to ensure that they are administratively equipped to meet the new requirements - a lengthy process to complete.
As a matter of urgency, social landlords should determine their staging date; consider the impact on payroll costs; identify who must be automatically enrolled; decide which pension scheme to use for automatic enrolment; and check that it meets the requirements to be a qualifying workplace pension scheme.
Sasha Butterworth, partner and head of TLT’s pensions team firstname.lastname@example.org