Auto enrolment: the heavy price for failing to comply

30th July 2015

Running a small business isn’t easy: there’s always a lot to do and not enough hours in the day in which to do it, so perhaps it’s not surprising some SMEs are falling into the trap of neglecting their workplace pension obligations.

But those who overlook their auto enrolment duties do so at their peril, facing large fines for failure to comply. It’s an issue that could potentially threaten the survival of a small business, and in order to highlight its importance The Department of Work and Pensions has launched an advertising campaign to the 1.3 million small and micro firms that are yet to enrol their staff to make them aware of their duties.

The Pensions Regulator (the body responsible for UK regulating workplace pensions) takes auto enrolment obligations extremely seriously, and has this year for the first time issued escalating penalty notices to businesses for failure to comply.

Escalating payment notices are fines issued to employers who persistently fail to comply with their auto enrolment duties, and consist of fines of between £50 and £10,000 per day, depending on the size of your workforce.

Four companies were issued with these fines in the first quarter of 2015. To have reached this stage, they will already have received informal guidance and warnings, statutory notices and fixed penalty notices of £400 from the Pensions Regulator.

The latest figures from the Regulator also show that the number of fixed penalty notices issued is rising by 20% every quarter, and that in the first quarter of this year alone the regulator had to exercise its powers 446 times.

So why are so many employers failing to comply, when they know the obligations of auto enrolment? Research by the Pensions Regulator suggests the problem is that too many small businesses are leaving preparations until the last minute, don’t understand what it is they need to do, or, worse still – are ignoring it completely.

The issuing of escalating penalty notices shows the Pensions Regulator can and will act to tackle non-compliant employers, and that auto enrolment isn’t something that can just be ignored.

Seeking expert help and advice can help you stay on track with your obligations as an employer and ensure you stay compliant.

The Pension Regulator’s recent stance shows non-compliance will come at a high price to employers, so make sure auto enrolment is the number one item on your to do list.


All content is for general guidance only. It provides an outline, and may not include points which are important in your case. You should not rely on this blog without taking individual advice based on the full facts of your case. The information given was correct at the time of publication.


 

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