18 Feb 2016

Firm fined £10,000 over workplace pension delay

Firm fined £10,000 over workplace pension delay

 

A business has been fined £10,000 for failing to comply with new rules which force businesses to offer staff a pension scheme.

Auto enrolment legislation has been designed to encourage a retirement savings culture. It requires all employers to automatically enrol some or all employees into a workplace pension scheme that meets minimum standards and requires employers to contribute.

As well as providing a suitable workplace pension scheme, employers will need to undertake new processes every pay period and provide mandatory communications and maintain appropriate records.

The new duties are wide ranging and provide a significant challenge to employers - and for most SMEs, the deadline is either looming or has past.

Regulator takes action

The Pension Regulator has just released details of action taken against a sports company which failed to meet its obligations.

A spokesman for the regulator said: "After failing to complete a declaration of compliance and informing us they hadn’t even started automatic enrolment, we issued them with a compliance notice requiring them to pay the arrears of their own and the staff contributions.

"These contributions were payable from their staging date, which was in 2014. They failed to comply within the 60 day deadline, so they were then given a £400 fine and a further 28 days to comply."

The business repeatedly failed to provide evidence of compliance, resulting in the regulator issuing them with an escalating penalty notice.

The spokesman added: "This gave them 28 days to comply, after which the fine would increase to £2,500 per day. The daily accrual rate of escalating penalty notices is determined by the number of employees in the PAYE scheme.

"Eventually the adviser contacted us and within four days a scheme had been chosen and put the relevant staff into it. By then the daily penalty had amounted to £10,000. These fines, along with having to pay staff contributions of approximately £15,000, could have been avoided had the employer complied on time.

Action needed now

Peter Mutch, Corporate Benefits Director at Aberdein Considine, which specialises in helping SMEs meet their auto enrolment obligations, has warned businesses about leaving it too late.

"Up to half a million small and micro employers must act this year to meet their new workplace pensions duties or risk a fine," he said.

"All of these employers have received letters from The Pensions Regulator alerting them of when their automatic enrolment duties start and reminding them to take action.

"So far the roll out of automatic enrolment has been a success, with millions of workers now saving for their retirement who were not saving before.

"Research shows that most employers want to do the right thing by their staff but that smaller employers are more likely to leave things to the last minute.

"It is expected there will be more who, despite the message to prepare early, leave it too late or do not take action at all. Failing to prepare risks avoidable compliance action, fines and perhaps unwanted publicity."

Specialist support

Peter Mutch has over 30 years experience dealing in workplace pensions and providing expert employee benefit advice to companies of all sizes throughout Scotland. If you would like to speak to him or a member of his team, call 0333 0044 333 or click here.

 

Please correct the errors below before submitting your request:

Get in touch

Our dedicated client contact team prefer to receive enquiries through our contact form. We'll endeavour to get back to you within 24 hours or during the course of the next working day.

Source of enquiry