Auto enrolment, for those of you who aren’t aware is a Government initiative in order to help more people in the country to save for later life through a pension scheme at work.
This is, we’re sure you’d agree, a great incentive for people to start saving and putting money away for later life but as an employer, if you don’t comply then there’s certain things that you should be aware of.
If you don’t know already, then 2016 is a year that will bring about big changes for businesses in the SME sector with over 150,000 employers yet to stage themselves for auto enrolment.
If you’re reading this and are a business owner then it’s worth you knowing that it can take up to 12 months prior to your company’s staging date to ensure that your business and staff are all ready for the process. So it’s important you don’t delay because, if you do, it could lead you to being fined (see below!)
There are a few different fines that you could face if you aren’t careful as an employer when it comes to ensuring that you’re all set up to go with Auto Enrolment.
The Pensions Regulator is responsible for ensuring that companies all comply with their employer duties when it comes to auto enrolment. There isn’t going to be instant fines from the Pensions Regulator, they prefer to take the approach where they guide businesses, educate and also support them instead of giving them deadlines, then fines and penalties.
This particular type of breach could come about from a first time breach for non-compliance of duties or unpaid contributions or quite simply, not registering with the Regulator.
Your company will be issued with a warning letter which may also be referred to as an enforcement notice or an improvements notice. This will emphasise any breaches of duty that an employer has either knowingly or unknowingly made and they will be notified of a time frame in which they are required to comply.
This is where it starts to get more serious and the longer is left unresolved, the more it will end up costing the business.
If your breach is not addressed within the outlined timescale then the Regulator can issue two different levels of penalties to the business; the first being a fixed penalty notice of £400.
In theory, this £400 FPN is a ‘slap on the wrist’ for the business. They will then be given more time to complete the remedial actions that are outlined in the enforcement notice. If nothing changes then there is an option for the regulator to enforce escalating penalties ranging from £50 a day for employers with one to four employees to £10,000 a day for those companies who have over 500 employees.
An example, if your company has 49 employees then the escalating fine you can expect to face if you don’t comply would be as follows:
· £500 per day.
· £2,500 per week.
· £10,000 per 4 weeks.
· £130,000 per year.
Here at K A Farr & Co, if you haven’t even begun thinking about auto-enrolment then it’s about time you ‘bumped it up’ a place or two on your priority list.
If you need assistance with anything related to auto-enrolment, feel free to get in-touch with us here at the office and one of our friendly team will be more than happy to assist you.
You can contact us on 01704 211434 and one of the team will happily go through any questions you may have. Alternatively, you can send us an email if you’re a little phone shy on firstname.lastname@example.org and we’ll get back to you within 5 working days.