Firms face fines for failing to meet auto-enrolment deadlines
Please Note: Information in this blog was current at the time of publishing, but may no longer be up-to-date with current legislation. Please visit our blog for the latest pension articles.
The staging for auto-enrolment has now reached medium-sized businesses, and The Pensions Regulator has announced it issued 166 penalty notices in the last quarter of 2014 to companies that had not followed regulations.
The penalty notices are for a fixed fee of £400, totalling £66,400. This is a huge increase from the previous quarter, in which just three penalty notices were issued. In that same quarter, The Pensions Regulator gave out 163 compliance notices, compared to 1,139 in the final quarter.
Charles Counsell, The Pensions Regulator's director of auto-enrolment, told Money Marketing that it "appears some medium employers waited for a prompt from the regulator before completing their auto-enrolment duties." Firms risk a fine if they have not completed their declaration of compliance within five months of their staging date, which is based on the number of employees they have.
Larger firms had earlier staging dates than smaller firms, and it could be expected that more companies will miss the staging dates as they have less money to put towards employee pension funds. With medium and small firms beginning to become eligible, time will tell if this is true. Nonetheless, the vast majority of firms have completed their declaration of compliance in time, which can be seen as a measure of success for auto-enrolment.
The Pensions Regulator can issue fixed penalties and daily escalating penalties to companies that do not comply with their staging dates. These escalating penalty notices (EPNs) range between £50 to £10,000, based on how many employees a company has. If the employer does not pay the penalties and continues to avoid complying with auto-enrolment, they could face prosecution for wilful non-compliance. The daily rate is shown in the following table:
|Number of persons||Prescribed daily rate (£)|
|500 or more||10,000|
These figures are likely to serve as a deterrent for anyone considering not complying with the regulations, especially as they are applied daily and not as a single fee.
Auto-enrolment began in 2012 and will apply to any employer with at least one member of staff. To be included in auto-enrolment, an employee must work in the UK, be between 22 and state pension age and earn over £10,000. Younger people or those earning smaller salaries can ask to opt in, and employers must make a contribution if employees earn over £5,564.
One of the main benefits of auto-enrolment is changing young people's attitudes to pensions. A recent study found that of 18-24 year olds with a pension, all of them actively contribute to it. Surprisingly, the percentage of people not contributing increases with age, as 14% of those between 35-44 with a pension did not add anything to it, and this increased to 17% for 45-54 year olds and 23% of over 55s. This suggests that younger people are thinking more about their future finances and taking steps to protect themselves, which may help to defuse the pension time bomb.
Have you had experience with auto-enrolment? Let us know with a comment below.
Call 0800 304 7288 for a friendly chat about your pension
The details provided in this article are for general information only and are in no way deemed to be financial advice. All of the material is correct as of the publication date, but could be out-of-date by the time you read the article. For our latest information and news, please see our articles section: https://www.portafina.co.uk/whats-new
We are really looking forward to reading your comments. Before you start writing, please just remember that everything you write will be displayed publically – including your name. Not sure what sort of thing you can write, and what sort of things you should avoid? Please have a quick read of our social rules for guidance.
INFOPK - LIGHT
Be clear about your pension
Your free pack will explain your pension options, the pros and cons, and how getting financial advice could make all the difference for you; we just need a few details first. (Please see our privacy notice for information on our data practices here.).
Please note: all fields marked with an asterisk (*) are mandatory