The Government’s new pension reforms are gathering pace. At the start of this year, all employers which have 350 or more “workers” needed to have complied already. From the middle of next year employers with fewer than 30 workers will be caught by the new rules.

Among other things, the rules require employers to “automatically enrol” certain staff into an approved pension scheme and then pay contributions on their behalf.

The rules and process for complying are complex and firms need to get up to speed with them well in advance if they are to meet the deadlines.

Failure to do so can lead to severe financial penalties.

An example of this complexity is the definition of “worker”. The term “worker” is specific – it does not simply apply to the working population as a whole. Anyone meeting the definition of “worker” places certain duties on their employer.

To complicate things further, there are three different categories of worker, determined by a person’s age and how much they earn. Each category carries a different level of responsibility for the employer.

1. Eligible job holder: This category of worker must be automatically enrolled into the employer’s scheme and the employer must make contributions;

2. Non-eligible job holder: This category does not have to be automatically enrolled, but if the employee requests to join the scheme the employer must allow it and must pay contributions;

3. Entitled worker: This category does not have to be automatically enrolled, but if the employee requests to join the scheme the employer must allow it, but is not compelled to pay any contributions.

Confused? You are in good company. The good news is that products are being designed which allow much of this worker categorisation (and some of the other complexities) to be automated. These systems dovetail with employers’ existing payroll providers, taking away a significant admin burden from the employer.

But please do not leave these pension reforms until the last minute. You need to be speaking to your payroll provider or your financial adviser well in advance of your compulsory “staging date” if you are to ensure compliance.

Mark Fisher is a qualified financial adviser and a director of Ardent Financial Planning. He specialises in workplace pensions and he holds the Certificate of Pensions Auto-enrolment through the Pensions Management Institute