The number of compliance and fixed-penalty notices sent to businesses who have not yet complied with all of the terms of pensions auto-enrolment have shot up, revealing that small companies are struggling to understand their responsibilities to enrol their employees in pension schemes.
Following The Pensions Act 2008, all employers have to set up a workplace pension for their staff members with different deadlines given depending on the size of the business. But figures from The Pensions Regulator show many enterprises are failing to enrol themselves by the set deadline. Its quarterly bulletin reported 469 compliance notices were sent out between July 1st and September 30th.
The figures also show that 107 fixed-penalty notices of £400 were sent for failure to comply with employer duties, and 85 unpaid contributions notices were handed out. In the previous quarter 119 compliance notices, 50 unpaid contributions notices, and 68 fixed-penalty notices were given between April 1st and June 30th.
This reveals a huge jump in the number of companies requiring compliance notices to remind them about auto-enrolment and setting up a workplace pension for their employees over the last few months.
Sean McSweeney, auto enrolment specialist at pensions consultancy Chase de Vere, said: “Many employers are struggling with the challenge of implementing pensions auto-enrolment.
“We expect the numbers to increase considerably in the months ahead as smaller employers reach their staging dates.”
Most of the notices have been given to companies with more than 50 workers, and many more businesses of this size will approach their deadlines for auto-enrolment over the next few months.
Mr McSweeney confirmed several businesses have come to Chase de Vere in a panic, as they have missed their deadline and need help with the procedure. Some employers still believe auto-enrolment is optional, but it is actually obligatory and they could face steep fines if they do not comply with the legislation and meet the strict deadlines.
Each business has a separate staging date, depending on the number of employees they hire. Those with more than 250 workers had to sign up to the scheme by February 2014. However, companies with 30 workers or less have until April 2017 to enrol their staff.
After the enrolment, companies have to pay one per cent of their employee’s qualifying earnings into the pension scheme until April 2019 when this will increase to three per cent. The recent “Workie” TV advert was launched by the government to remind businesses to sign up to the pension scheme by their deadline.
Mr McSweeney added that he hopes the campaign will work to help stop small employers “sleepwalking into trouble”.
Despite his concerns, around 5.4 million people have been enrolled into workplace pensions since 2012 according to the Chancellor’s Spending Review.