Warning to region’s SMEs over auto-enrolment fines

PUBLISHED: 13:14 02 February 2016 | UPDATED: 13:14 02 February 2016

Picture: Gareth Fuller/PA Wire

Picture: Gareth Fuller/PA Wire

A sharp rise in warning letters and fines being handed out to employers for failing to comply with their new workplace pension duties has been recorded by the Pensions Regulator.

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Mike Cherry, policy director for the Federation of Small Businesses, said: “It’s good to see such high levels of compliance among small firms that have staged so far.”

He continued: “However, it is clear that many will struggle to get to grips with the legislation and implement it correctly, while large numbers of small firms are concerned about the cost to their business.

“We advise smaller employers to plan ahead and ensure they are prepared for their staging date, and seek advice and guidance from trusted parties.”

Pensions Minister Baroness Altmann said: “It is really encouraging to see that so far, the vast majority of small and micro employers have set up a workplace pension for their staff and are helping them on their way to a more financially secure retirement.

“From now on, the smallest employers will start to meet their obligations and we must ensure they know what to do and have help if they need it.

“So far 5.8 million people have been automatically enrolled into a workplace pension. Thanks to automatic enrolment workplace pensions are becoming the norm and we expect nine million people to be newly saving or saving more.”

The increase comes as thousands of small and micro employers, some just employing one or two people, are being brought on board the Government’s flagship automatic enrolment scheme to encourage workplace pension saving.

A total of 4,818 compliance notices have been issued to firms since auto enrolment started in autumn 2012 - but more than half of these, at 2,596, were issued between October and December 2015 alone.

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Compliance notices are often handed out when firms have left their workplace pension preparations too late. The notices contain deadlines which firms need to meet, or they risk getting a fixed £400 fine.

Automatic enrolment started with the largest firms, which tend to have the most experience of pensions, but concerns have been raised around how smaller employers will cope with the changes.

Around 12,000 small and micro employers, employing fewer than 50 people each, became subject to the new legal duties last summer. Some may just employ one person, such as a carer or a nanny.

The Pensions Regulator said that a total of 1,594 £400 fixed penalty notice fines have now been issued to employers - and 1,013 of them were issued in the last quarter of 2015.

The regulator said it was expected that a number of employers would need the “additional nudge” of enforcement action to comply with their duties.

It said that more than 90pc of the first small employers required to put their staff into a workplace pension have now complied with the law, showing that automatic enrolment is successful for all sizes of employer.

Executive director of automatic enrolment Charles Counsell said: “It is very encouraging that more than 90pc of the smallest employers have complied with the law, clearly highlighting that automatic enrolment is successful for all sizes of employer.”

He continued: “We have always expected to see a rise in the number of times we use our powers as large numbers of small and micro employers reach the date their duties come into effect. Compliance notices act as a warning and give employers a deadline to meet their duties and avoid a fine.”

Earlier this week, the Commons Public Accounts Committee said the “real test” for the auto-enrolment scheme was beginning as smaller employers enrol their staff. The MPs warned that these employers have “fewer resources” to cope with the change than larger companies.

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