Small businesses fined for leaving Auto Enrolment too late
10th March 2016 | News
The Pensions Regulator has confirmed there has been a considerable increase in compliance action with up to 500,000 small employers set to reach their auto-enrolment pensions staging date this year.
According to the Regulator, of the 1,594 fixed penalty notices issued since the commencement of auto-enrolment, 1,021 were issued in Q4 2015. But more worryingly, of the 31 escalating penalty notices issued since 2012, 24 were issued in Q4 2015; and these figures are only likely to increase in the coming months.
The Regulator says that while the vast majority of small business owners want to do the right thing, smaller firms are more likely to leave their auto-enrolment obligations until the very last minute.
This has subsequently led to the increase in the number of compliance notices issued, with some small firms failing to get their affairs in order until they were issued a fixed penalty notice of £400.
In collaboration with the Department for Work and Pensions (DWP) the Regulator plans to continue to get the message of auto-enrolment pension schemes across to smaller employers through various means, notably by mail, TV and radio advertising and social media channels.
The Regulator estimates that their communications plan to date has been a success, citing that 90 per cent of the first 12,000 small employers are now compliant.
There are however cases of escalating penalties for some small employers that failed to do anything about their auto-enrolment obligations until after their staging date.
In one particular case, the Regulator issued a compliance notice requiring them to pay both the employer and employee contribution arrears. They failed to comply and were subsequently issued with a £400 fine.
In the end, the employer appointed an adviser but by this point, they had incurred additional fines totalling £10,000 (£2,500 per day for four days). In total, their failure to comply amounted to unnecessary fines of £25,400: £400 fixed penalty fine, a £10,000 fine and up to £15,000 in employee backdated contributions.
If you’re already a TaxAssist Accountants client or you’re thinking of becoming one, did you know we offer an auto-enrolment pensions service through our partners, Wren Sterling?
This national firm of independent financial advisers offer all businesses a qualifying workplace pension scheme via its Wren Sterling Master Trust.