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Escalator

Going up

19 May 2015

The first escalating fines have been issued to companies failing to enrol their employees in new pension schemes.

The Pensions Regulator has issued its first escalating penalties – fines of between £50 and £10,000 a day depending on the severity of the breach – to four companies flouting automatic enrolment rules during the first quarter of 2015.1

Over the same period, a total of 198 firms were issued with a £400 fixed-penalty notice, compared to 166 in the last quarter of 2014 – an increase of almost 20%.2

In this short video, Ian Price, Divisional Director at St. James’s Place, talks to Steve Moy, St. James’s Place Wealth Management Consultant, to discuss smaller employers’ key responsibilities and how they should approach auto enrolment.

Ian Price, Divisional Director at St. James’s Place, says he expects the trend to continue. “With over a million small and micro employers affected over the next three years, I expect more penalty notices to be served purely because more businesses will need to comply with automatic enrolment rules.”

“It’s evident that the rules are here to stay and the regulator has demonstrated it will use its powers if needed. It’s also clear that small businesses need all the support they can get if automatic enrolment is to be implemented successfully,” continues Price.

Stage is set

Research3 shows that, while awareness of automatic enrolment remains high among smaller employers (86%), one in five of those set to ‘stage’ between June and November this year have not yet drawn up plans to meet their obligations. Also worrying is the significant minority of micro employers (18%) who believe that they do not need to do anything to comply with automatic enrolment.

Automatic enrolment rules state that every business with at least one member of staff must enrol eligible employees into a qualifying workplace pension scheme and make contributions towards it. Every employer is given a start date set in law – their staging date – and the regulator recommends that employers should start preparing for automatic enrolment 12 months ahead of that date. “Clearly their staging date is the first thing every employer should establish,” advises Price.

Employers whose staging date is coming up should have already received a letter from the regulator, but a staging date can also be found by entering the company’s PAYE reference into the online tool at www.thepensionsregulator.gov.uk.

Micro processing

In most cases, large and medium-sized employers have already staged successfully, but Price argues that processing the wave of small and micro employers will be very different. A resulting surge in demand for advice and help with workplace pension schemes is to be expected. 

“Smaller employers are likely to be concentrating on the day-to-day running of their business and are more likely to want to park automatic enrolment with an expert. Employers should therefore engage with a professional as early as possible if they’re at all unsure about what their new duties are, and ensure they leave themselves plenty of time for the correct arrangements to be put in place.”

1 Pensions Regulator, Automatic enrolment, April 2015

2 Pensions Regulator, Automatic enrolment, January 2015

3 ‘Employers’ awareness, understanding and activity relating to automatic enrolment and evaluation of communications campaign’, The Pensions Regulator, March 2015

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