As everyone knows – I am a fan of auto-enrolment and have made my living through www.pensionplaypen.com helping employers engage with workplace pensions and encouraging compliance.
The rest of my blog is not an encouragement to small businesspeople to jack in workplace saving but a route map for employers who would rather not set up a workplace pension.
How to get (your company) out of auto-enrolment
Pension auto-enrolment is slowly becoming a reality for the UK’s smallest companies, with the vast majority of small businesses required to be operating pension schemes by early 2017, and every business in the country required to be auto-enrolled by early 2018.
Unlike large or medium-sized businesses with hundreds of employees, freelancers, contractors and micro-businesses may be exempt from pension auto-enrolment. If your company has employees – even one – you are legally required to operate a pension scheme. However, if your business is comprised only of directors you are not legally required to operate a scheme. Many director-only micro-businesses already operate private pension schemes which may not meet auto-enrolment criteria, so declaring your company exempt will make sure you have no bureaucratic hoops to jump through, and can continue your pension contributions as normal. However The Pension Regulator will not know you are exempt – so they need to be told!
To opt-out you can inform the Pension Regulator that your company is exempt by emailing firstname.lastname@example.org using the following template:
1. I confirm that My Limited Company Name is a not an employer for the purposes of automatic enrolment for the following reason – (select one option from the list below):
a) There is only one director and there are no other staff working for the company
b) The only people working for the company are directors and none of them has an employment contract
c) The only people working for the company are directors and only one of them has an employment contract
d) The company has ceased trading (including date ceased)
e) (if there is some other reason why you believe you do not have any automatic enrolment duties, please provide a brief explanation)
2. The letter code for the company is: The letter code is a 10 digit number which can be found on all letters sent from The Pensions Regulator
3. The PAYE scheme(s) reference is: XXX/XXXXXXX
4. The companies house number (where applicable): XXXXX
5. The name, email address, address and telephone number of contact at the company.
If you have any queries please do not hesitate to get in contact.
The Pension Regulator should then confirm your exemption, and you’re all set!
So what do you think?
Well there are two schools of thought.
If you are the kind of person who wants to avoid bureaucracy at all costs, then you probably declared yourself self-employed and only run your limited company because it was tax-preferable to pay yourself via dividends. As dividends don’t count as earnings, you many not even be eligible for auto-enrolment even if you didn’t declare yourself exempt.
There are many who would say you are a fool to yourself but what do they know about your financial prudence or lack of it. You couldn’t be bothered less – you are a self made man and you’ll be a self-made pensioner.
You are just getting by and you’ve got a mate/accountant/book-keeper who has been keeping your head above water by managing your tax affairs. One moment you are working for Uber , the next you are a computer contractor- you don’t know anything about pensions and don’t want to. But you are scared to even think of the future.
You’d like to be in a workplace pension and put away something for the future but your life is in such a mess right now that you’d prefer to put things off. If there is a letter you could sign which would make the problem go away for a bit, you’ll sign it.
School 1 or 2 – which are you?
If you are in control and don’t want Government or anybody else screwing you around, auto-enrolment is not for you – use your exemption.
But if you are in the second school and you’re using self-employment and Director’s exemptions to kick the can down the road, get in touch – 07785 377768 or henry.tapper@pensionplaypen. I’ll have a chat and point you in the direction of TPAS.
Or you can contact TPAS at http://www.pensionsadvisoryservice.org.uk/ or on 0300 123 1047