Auto enrolment into a pension scheme create particular issues for the film industry.
Under legislation recently introduced by the government, the majority of individuals working in the UK will need to be automatically placed into a pension scheme and benefit from a company-paid contribution. The regulations create particular issues for the film industry for a number of reasons.
The aim is to encourage as many people as possible to save for their retirement. Therefore, the rules apply to ‘workers’ rather than just employees; meaning that they can apply to talent such as actors, even if they are technically self- employed. Rather than one simple rule applying to all, each case needs to be judged on its merits and many assessments will not be conclusive. As such, time will be needed to allow for careful and accurate analysis.
It is becoming increasingly difficult to find a good pension provider. Rather than rubbing their hands with glee at the prospect of more business, traditional pension companies are becoming much more selective over which employers they will deal with. In particular, many film companies are unlikely to be attractive clients, due to their constant flow of staff and relatively low contributions. A small number of new pension companies have emerged, but these too are approaching capacity. Therefore the already constricted market place will become even smaller.
Even more straight-forward matters, such as the start date, can cause issues for film companies. The implementation date is determined by the size of the largest payroll that the employer participated in as at 1 April 2012. with the largest affected first. Therefore, whether or not a production was underway at that time could alter the date by years. The finer details are quite technical, but the numbers on which the original date is calculated could include royalty payments, individuals who were not actually working on that date as well as employees, and will not always be correct.
The common theme is that planning in advance is essential. Unlike more traditional employers, there may well not be anyone in your organisation whose remit would comfortably cover this area and in-house technical knowledge could be scarce. Help and advice is available, but with many thousands of employers ‘going live’ at the same time, the companies that ask first are most likely to reach the right answers with least hassle. Employers leaving it late will run the risk of making errors that will be difficult to correct, significant fines and a choice of perhaps only one pension provider – along with many thousands of other employers.
10 things you can do to make it easier:
1. Find out when you need to comply. You should receive a letter from the Pensions Regulator 12 months in advance, but do check that this date is correct
2. Make someone responsible for the project who can coordinate with payroll and pension providers and internal audiences
3. Create a plan of action, 6 months ahead (if you have 6 months)
4. Engage with your payroll provider as soon as possible. If they can do most of the systems work, it will save you time and hassle
5. If you have an existing pension scheme, find out if you can use it and whether it’s fit for purpose in the longer term
6. Budget. The earlier you factor in the cost, the easier it will be. You can reckon on at least 1% of earnings, but you may also need to pay for professional help and payroll providers may charge more for their services
7. Assess your workforce to establish who you need to include. This can take time and a clear methodology should be applied.
8. Find out if your business has any specific issues that need further investigations, such as using multiple payrolls
9. Find out if you need outside help. Do this as soon as possible. Advisers will be in high demand and you may struggle to find the one which best suits your needs
10. Keep records. There are requirements to keep basic information, but you should also keep records of the reasons why you have made certain decisions.
Whatever you do, don’t leave it until the last minute. The sooner you plan, the simpler it will be.
Christine Corner, partner, and Chris Faulkner, associate director, Grant Thornton UK LLP