Auto-Enrolment fines climb sharply

Date

Dec 01, 2016

Categories

Pensions

The Pensions Regulator’s big furry blue monster has been appearing on our TV screens for several months now, informing employers about their obligations for pension auto-enrolment. There have been adverts on the radio too, and hopefully if you are an employer then by this point you’ll be fully aware of your staging date and how you need to comply – perhaps you’ve already registered.

As anticipated, The Pensions Regulator is keeping a close eye on those who don’t comply with pension auto-enrolment legislation. They’ve now started to raise the ante, and the 38 escalating penalty notices which were issued between April and June this year rose to 576 notices issued between July and September. As an employer, if you receive one of these notices it’s going to cost you between £50 and £10,000 per day, depending on the size of your business.

Fixed penalty notices have also been handed out in abundance. These flat rate £400 fines rose nearly four-fold, from 861 between April and June to 3,728 between July and September. It’s clear that the penalties for failing to comply with auto-enrolment legislation are proving very costly indeed.

The Pensions Regulator has produced a very lengthy document on ‘Compliance and Enforcement Strategy’, in which they break down non-compliance into three separate stages. The first stage is a written warning, called a Statutory Notice, which draws attention to your obligations to comply. The fixed £400 fine comes next, if you don’t adhere to the statutory notice or if there’s sufficient evidence of a breach of the law. Lastly, if you don’t pay the £400 fine within a specific period, an escalating penalty notice can be issued. This varies depending on your number of staff, and is calculated as a daily rate, ranging from £50 to £10,000.

The reasons being given by employers for non-compliance are wide-ranging. However, excuses such as illness or being short-staffed are not being accepted as ‘reasonable’, in view of the 12 month notice period which every employer has been given in order to meet their obligations. Richard Harrington, minister in the Department for Work and Pensions, has spelt out the situation as follows:

“So far, more than 250,000 employers are helping more than 6.7 million people save into a workplace pension. The duty is being extended to all UK employers and they must ensure they enrol their staff into a scheme by the deadline for their firm, it’s the law.”

So if you haven’t yet set up your workplace pension then make sure you act in time to avoid these heavy penalties. As always, if you have any questions then please get in touch.