Auto enrolment – are you ready? Big fines for those that delay
From June 1, SMEs employing fewer than 30 staff must be ready to comply with auto-enrolment pension regulations or risk fines of at least £400.
Designed to encourage 10 million employees to save towards their retirement, the government regulations are being rolled out in stages based on the size of a company’s workforce. Smaller businesses are in the next tranche to enrol employees onto the scheme.
Are you ready for auto enrolment?
The Pension Regulator is clamping down on businesses who fail to comply so any delay is risky. Regardless of their size, firms can be fined £400, with the possibility of further escalating fines.
Some of the key facts and issues:
Businesses in the next stage of auto enrolment will have received a letter from the Pensions Regulator, which is sent 12 months ahead of the due start date. They should have started the registration process already, otherwise fines may be due.
Businesses should already be planning ahead for their ‘staging date’ and ensuring that they have all the necessary paperwork to complete their declaration of compliance.
Compulsory employer contributions are the main costs associated with the pension scheme with businesses required to pay a minimum employer contribution for everyone they automatically enrol and anyone who opts in. The minimum amount is being phased in, starting at 1% and rising to 3% of staff’s qualifying earnings.
Pension solutions are not necessarily free and some of the large insurance companies will charge employers a service fee to have their pension scheme.
Businesses should check with pension providers whether existing pensions for any employees will qualify for auto-enrolment as some may not.
Small employers introducing a workplace pension for the first time should speak to an appropriate adviser who can help to identify a scheme best suited to their workforce.
The Pensions Regulator lists the ‘staging dates’ for the legislation and provides a useful step by step online guide to preparing for compliance. www.thepensionsregulator.gov.uk/employers/planning-for-automatic-enrolment.aspx