Auto enrolling your staff into a pension scheme is becoming the norm for business owners and this year alone, more than 500,000 businesses are due to stage for auto enrolment.
The Pension Regulator states that more than 90% of the first small employers required to enrol their staff into a workplace pension have now complied with the law, but the figures issued by the pension regulator suggest that around 10% or 50,000 businesses will fail to comply, leading them to face warnings and fines for non-compliance.
The initial fixed penalty for non-compliance is £400 but there is a high possibility of further escalating fines if you fail to comply. By December last year, more than 1,500 fixed penalties had been issued since the start of auto enrolment, along with 31 escalating penalty notices.
It is essential that you plan for auto enrolment in good time, most compliance notices were issued because employers had left their preparations too late, resulting in hefty fines for non-compliance.
What could happen if you don’t comply?
One such company which failed to enrol its staff into a pension scheme by the required staging date, received a fine of £10,000 by the Pension Regulator. The employer received an initial fine of £4000, but still failed to comply. The regulator subsequently issued a compliance notice requiring payment of both the employer and employee contribution arrears.
The employer eventually appointed an advisor. However, as a result of its non-compliance, the employer incurred an additional fine of £10,000 and had to pay round £15,000 in employee back-dated contributions.
This case demonstrate that the Pensions Regulator appears to be taking a firm and uncompromising stance on employers who fail to comply with their auto enrolment responsibilities. With fines running at £2,500 per day for non-compliance, employers face heavy financial penalties.
All these costs and penalties are avoidable and it is important that you do not fall into the trap of ‘burying your head in the sand’ when it comes to auto enrolment. All employers now have a legal obligation to automatically enrol job holders into a qualifying pension scheme. Styles and Co can help you understand these responsibilities and ensure that you avoid falling ‘foul’ of any pension regulations and risking fines from the Pension Regulator.
What should your next step be?
If you’ve not already enrolled your staff into a pension scheme, our recommendation is to take action now so that everything is in place when your staging date arrives. If you require any more information in the meantime, please do not hesitate to contact Sarah Salton on 01925 761 600 or firstname.lastname@example.org