Small businesses need to be watchful of auto enrolment deadlines

Small businesses who have not yet implemented auto enrolment for employees eligible for workplace pensions are being urged to make sure they meet their obligations. The Pensions Regulator (TPR) has been writing to small and micro-businesses (those who employ between one and nine people) to let them know their staging dates.

Under the Pensions Act 2008, all employers are obliged to put qualifying staff into a workplace pension scheme and contribute towards it. Workers can opt out later but they must still be auto enrolled. The largest companies were obliged to implement auto-enrolment at the end of 2012 with staging times being staggered after that based on the number of employees. All businesses operating PAYE schemes for 58 or more people should be running auto-enrolment by now.

TPR has a range of powers if employers fail to meet their auto enrolment obligations. They can estimate unpaid contributions and charge interest on these until the arears are met. They can recover unpaid contributions on behalf of scheme managers and trustees and, if they issue a statutory notice that is not complied with, they can follow it with a Penalty notice.

Penalties available to TPR include a Fixed Penalty Notice of £400 and an Escalating Penalty Notice of between £50 and £10,000 for every day the business remains non-compliant, with the amount payable based on the number of employees. A Prohibited Recruitment Conduct Penalty Notice can be issued at a maximum of £5,000 and a Civil Penalty Notice where contributions have not been paid can result in a fine of up to £5,000 per individual and £50,000 per organisation.

These are stiff potential penalties that could leave a transgressing business facing a heavy financial burden. It could even lead to a company requiring business rescue but all these penalties are easily avoidable as long as businesses comply with the rules and implement auto enrolment by their staging dates. As well as the letters being sent out by TPR, businesses can find out their staging dates online.

By Phil Smith

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