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FCSA Pensions Guidance

FCSA Pensions Guidance

With one week to go before new pension laws are implemented, the FCSA urges everyone to be prepared

The flexible workforce, employment agencies and umbrella companies must all prepare for pension auto-enrolment to ensure full compliance and avoid hefty fines, according to Stuart Davis, Chairman of the Freelancer and Contractor Services Association.

From 1 October 2012 all UK companies are required by law to include all of their workers that meet certain criteria, based in the main on age and earnings, within a UK pension scheme. Unlike the current rules, unless the worker actively decides to opt out of the pension scheme then pension contributions are required to be made by the worker and also the company providing the worker.

The date when a company is required to start automatically enrolling workers within a pension scheme will be governed by that company’s “staging date”. The number of workers included on the company’s payroll at the end of the financial year determines the companies staging date.

For FCSA members, which include the UK’s two largest Professional Employment Organisations (Parasol & Giant), this means that their staging date will start from 1 March 2013, with other FCSA members becoming included within the new legislation by September 2013.

It is not just those organisations that employ their workers under an overarching contract of employment that will need to comply with these new regulations any agency that provides workers and pays them, even under a contract for service (agency PAYE), will be required to provide a pension and automatically enrol the workers from the staging date of that agency.

Therefore, all UK businesses that are involved in the supply and payment of temporary workers will need to consider how the new regulations will apply to them, and have systems in place to deal with the additional regulations and also determine how the pension contributions will be funded.

FCSA have reviewed the new regulations in detail and have taken professional advice to ensure that it and its members work both within the letter and the spirit of the law. All FCSA members who employ workers will have to provide a solution to their workers from their staging date.

For those FCSA members who provide a limited company solution, then their clients, if providing their services via Personal Service Companies, will be outside of the scope of the new regulations.

Commenting on the new system, Stuart Davis says: & lsquo;One of the main issues that will be faced by many companies will be the new funds required in some instances to fund the employer pension contribution which, depending on how the employer has structured their solution, could be as much as 2% of pay. Employers must take all precautions against inadvertently incentivising employees who opt out of the system as, if it is proved that they have done so, they will be found to be non-compliant. This could lead to fines up to &pound50,000.’

FCSA has already updated their industry leading, Best Practice - Code of Conduct for Pensions Act compliance guidance. This latest update ensures that FCSA prospective and existing members are working towards the very highest standards of industry compliance. This is further strengthened by the transparent nature of submitting audit results directly to HMRC, a measure no compliant led business should be afraid of.


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