Running a Theatre and a Pension Scheme may not appear to have a lot in common. If your Theatre does not employ anybody the answer is there is none. However if you do, and any earn over £9,440 per annum (2013-14), auto enrolment into a pension scheme becomes a statutory requirement sometime between 1st January 2016 and April 2017. The exact date known as your Staging Date will depend on your PAYE reference number and you will receive 12 months notice in advance. These dates assume your Theatre does not employ more than 30 eligible staff.
To be subject to auto enrolment and employee must fulfill the following conditions:-
- They are aged between 22 and their state pension age
- Reach the income tax threshold which is £9,440 pa for the 2013/14 tax year
Membership is not compulsory and an employee can elect to opt out. Eligible employees will only need to be auto enrolled when they have completed up to 3 months employment.
Although that sounds reasonably simple employees who are under 22 and earn over £5,668 pa (2013/14) have to be advised they can voluntarily elect to join the pension scheme and the employer is then obliged to contribute. Employees can either be auto enrolled into a qualifying workplace pension scheme which would need to be established by the employer or to the Government established not-for-profit National Employment Savings Trust (NEST).
The Government has set minimum contributions that have to be paid by employee and employer on Qualifying Earnings which are currently £5,668 and £41,450 pa (2013/14). The minimum contribution on qualifying earnings are as follows:-
- To October 2017 – 1% employer and 1% employee
- October 2017-18 – 2% employer and 3% employee
- From October 2018 – 3% employer and 5 % employee
Employee contributions will qualify for tax relief at their highest marginal rate. For a basic rate tax payer this will have the effect of reducing their contribution by 20%.
Auto enrolment comes with legal obligations on the employer to comply. For employees who meet the eligibility requirements the employer is required by law to provide the right information in writing to employees at the right time. This also applies to employees who have the right to opt in on a voluntary basis. It should also be noted that the Government has put in safeguards to protect employees. This means employers cannot offer members incentives to opt out or refuse to employ somebody unless they agree to opt out. These safeguards are backed by legal penalties.
This is only intended as a brief guide to auto enrolment but it is our intention during 2014 to issue a grey paper which will provide further details. If you should require any further information please contact Michael Smith, 0191 384 8983 or email email@example.com.