The number of businesses fined for not complying with auto enrolment pension rules surged between October and the end of December last year.
The
Pensions Regulator said that it made over 1,000 £400 fixed-penalty notices between 1 October and 31 December 2015 on employers that did not automatically put workers into a pension scheme. In the previous quarter it made just over 100 fixed-penalty notices.
The Pensions Regulator said that the sharp rise
in fines was because the pension rules applied to more employers, in particular smaller employers which are more likely to “leave things until the last minute”.
There was also a big increase in the number of compliance notices sent to employers for not complying with pension rules, warning them that they may be fined. Half
of the 4,818 compliance notices sent so far were sent between October and December, the Regulator said.
Around 12,000 small and micro employers became subject to the new legal duties last summer. The majority have put eligible staff into a pension without the regulator having to use its powers although, as expected, a
number needed the “additional nudge” of enforcement action, The Pensions Regulator said.
- Employers may fail to complete their declaration of compliance because they wrongly assumed their business adviser was doing this for them. Employers and their advisers should be clear who is completing what automatic enrolment task and advisers should be clear about what services they
offer.
The real problem, however, is with micro and small businesses whose staging dates are in 2016 and 2017.
This will cause a bottleneck of businesses rushing to comply with the auto-enrolment
pension rules – what IFAs are calling the AE tsunami – just as many IFAs decide to leave the market, meaning no-one to set up these schemes.
As staging employers (the term being used for businesses as they reach their staging date) become smaller they’ll struggle to pay both their pension contributions and an IFA. Just as
those tardy micro and small employers - who should’ve started working on AE last year -now rush to comply.
At Guilford Accounting our advice is clear. Even if your staging date is later this year, or even next year, start working on AE now. We have teamed up with our payroll partner – Barnes Cooper Limited - to provide
auto-enrolment advice. Let us know if you need a referral before it’s too late and one of those penalty notices hits your desk.
Noel Guilford