Auto Enrolment Fines

The Pensions Regulator is carrying out inspections across the country and fines are being imposed where employers are not getting the auto enrolment process right. This is easy to do if an employer has not grasped the fundamental principles.

You must:

  • Find out your staging date – any new employers from 1st October 2017 must have a scheme in place.
  • Assess your work force to see whether you need to provide a workplace pension. For example, if you have any workers earning over £10,000 per annum then you will need to offer a workplace pension.
  • Choose a qualifying workplace pension.
  • Set up your chosen pension scheme within your payroll software so that contributions can be calculated.
  • Assess your work force on every pay run (because employees change).
  • Upload contributions to the chosen pension provider and make your direct debit payments for both employee and employer contributions.
  • Complete and submit your declaration of compliance to The Pensions Regulator. The deadline for this is 5 months after your staging date. This declaration is very important as it tells The Pensions Regulator that you have a qualifying scheme in place.

It is important to understand that all eligible employees need to be enrolled in the scheme initially – they can opt out if they wish after being enrolled.

What happens if I don’t comply?

The Pensions Regulator will fine you for non-compliance, failure to provide information, failure to submit information to them on time and for continuous non-compliance.

Fines start at £400 for not filing the declaration of compliance on time.

Fines then escalate on a daily basis for failure to provide a scheme.

Court orders can be issued for continuing failure and this can affect a business credit rating.

Please see link below which shows some of the fines issued by The Pensions Regulator.

http://www.thepensionsregulator.gov.uk/doc-library/escalating-penalty-notices.aspx

You will see that the names of the employers not complying are given.

In addition to fines, failure to provide a scheme within the time limits may lead to the need to back date contributions to the day that employees first met the criteria for enrolment.

Employers have been warned not to fall for fake exemption certificate scams.

Often these involve the sale of fake certificates that suggest that an employer does not have workplace pensions duties but this is not the case. Employers have legal duties in respect of Auto Enrolment and if you become aware of a scam like this then it needs to be reported to The Pensions Regulator.

Here at Phillips Frith, we help many of our clients to get their payroll right.

If we can help you, please contact us now and ask for Karen.