All employers within the hospitality sector are or will become obliged to enrol all eligible workers into a work-based pension scheme. To date all larger hotel and restaurant groups have automatically enrolled these workers and each organisation has encountered various issues that they have had to overcome. The positive news is that with an element of planning and determination these hurdles have been overcome and for many employees in the catering and hospitality sector pensions saving is now an accept process.
The key lessons for smaller organisations in the hospitality sector who will auto enrol from 2014, taken from those employers who have already gone through the process are:
- to give yourself plenty of time to prepare for auto enrolment – a minimum six months is recommended,
- not to assume that your existing pension scheme or your pension provider will meet your requirements for the purpose of the auto enrolment legislation,
- that you do not have to enrol all employees, however, checking those who do not qualify may prove difficult,
- decide early if you need assistance and seek professional help if you do,
- ensure that your payroll system is compatible with the demands of automatic enrolment, and
- communicate the changes to your employees sooner than later.
Auto-enrolment means that all employers in the UK must automatically enrol eligible jobholders and pay employer contributions in to a qualifying pension scheme from a date after 1 October 2012. The starting date is determined by how many workers an employer has in its PAYE scheme as at 1 April 2012. The following tables act as a guide.
Starting (Staging Dates)
Click here to view the table.
ll businesses within the hospitality sector will be advised in advance of its specific staging date by the Pensions Regulator or alternatively, they may access this information from the Pensions Regulators website via the following link:
Minimum Employer and Employee Contributions will be phased in over 3 transitional periods as follows:
Click here to view the table.
mployers will need to identify those workers that are eligible for enrolment and may use a combination of pension schemes both existing and new to meet their obligations, as long as the pension scheme(s) they select satisfy minimum quality standards. Identifying those workers who are eligible may be difficult for those employers where staff turnover is high and where there are temporary workers, agency staff, workers with different types of contracts and zero hours workers.
The Role of the Pensions Regulator
Unlike previous pension regimes automatic enrolment is being policed by the Pensions Regulator and all employers with one or more eligible employee have a legal obligation to contribute in to a pension scheme. Employers are required to register their pension details with the Pensions Regulator within 5 months of their staging date and face the imposition of fixed and then escalating fines if they do not comply with the auto enrolment legislation.
The Employees Perspective
An Employer is legally obliged to provide virtually all workers with specific information on what pension scheme it proposes to provide for its employees and when it will enrol its staff in to the Scheme. Employees who are automatically enrolled by their employer have a month within which they may decide to opt out of their employer’s pension scheme.
Unless an employer is particularly generous an employee will be obliged to make contributions to the pension scheme of at least 0.8% prior to 1 Oct 2017, then 2.4% from 1 Oct 2017 and then 4% from 1 Oct 2018. A further 20% of employees’ contributions will be added to the pension savings in the pension scheme by way of tax relief.