Farmers need to get up to speed with new pension rules, advisers have warned.
The law on workplace pensions has changed so that every employer with at least one member of staff will have to find a suitable workplace pension scheme and enrol eligible staff, in a process called auto-enrolment.
Smaller employers are gradually being included in auto-enrolment, which begins with the issue of what is known as a staging date for each business by the government.
See also: Get on top of real-time PAYE reports
“The new rules apply to employees aged between 22 and retirement and who earn £10,000 or more a year,” said Susie Swift, a partner in accountant Saffery Champness.
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“The current auto-enrolment contribution employers must make is 2% of salary, although this is set to rise in stages to 8% in 2018.
“Once enrolled, a percentage of the employee’s pay will be automatically deducted, with the employer also contributing, and the government contribution coming through tax relief,” she said.
“Any employee has the right to opt out of a scheme, but must be enrolled in it first to enable them to do so.”
Part-time workers who earn less than £10,000 can ask to take part if they want to and, if they earn more than £5,564, their employer will be obliged to make a contribution too.
Those aged under 22, or over state pension age and still working, can also opt-in in the same way.
Fines of up to £400 can be levied on employers who ignore the new rules and registration, which will evolve into more severe daily penalties for persistent inaction.
Even those who pay contributions into a pension scheme for their staff already will still need to check if it is suitable for auto-enrolment.
NFU pensions expert Martin Ansell advised farmers to do the following:
1. Know your staging date
The date on which auto-enrolment duties start is called the staging date. Go to the pensions regulator website and input your PAYE reference number where advised. This will generate a staging date for your business, which could fall at any time from now until the end of 2017.
2. Speak to your business advisers – accountants, financial advisers or any payroll advisers
What do they offer on auto-enrolment? The National Employment Savings Trust (NEST) is a free pension advice service offered to all employers.
3. Speak to employees
All businesses will have to write to all their employees and inform them of the changes to workplace pensions. Standard letters for this are available to use on the NEST website.
4. Option to postpone
Businesses have the option to postpone their staging date by up to three months. This may offer two advantages: first, it allows a business to align pension payments with pay periods, avoiding part payments; and second, may avoid bringing seasonal workers into the scheme.