More than half of small businesses not ready for auto-enrolment
More than half of small businesses are worried they will not be ready to implement an auto-enrolment workplace pension scheme in time to meet the fast-approaching deadlines, a new study claims.
The survey, by online business service Geniac, quizzed small businesses with a turnover of £500,000 or less. It found that 52% of such businesses were not confident of being ready by their individual staging dates.
Under the Pensions Act 2008, all employers are obliged to put all qualifying staff – those who work in the UK, are aged between 22 and the State Pension age and earn at least £10,000 – into a workplace pension scheme and contribute towards it. Workers can chose to opt out later but they must still be auto enrolled.
The Pensions Regulator (TPR) has a range of sanctions and penalties available to it for businesses who do not meet their workplace pension responsibilities. They are able to estimate unpaid contributions and charge interest on these until any arrears are met. They can also recover unpaid contributions on behalf of scheme managers and trustees.
If a statutory notice is issued and not complied with, the TPR can issue 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, depending on the number of employees affected. Beyond that, fines can be issued of up to £5,000 per individual and £50,000 per organisation.
These penalties could place pressures on finances and ultimately leave some businesses facing insolvency, so it is imperative that they prepare for the continuing rollout of the scheme. As of July 2016, all businesses with 30 or more employees should already be implementing auto-enrolment and a workplace pension scheme. The staging dates continue to be rolled out for smaller businesses depending on their PAYE reference numbers.
TPR has a staging date calculator on its website for businesses who can find their deadlines by entering their PAYE reference numbers. The staging date for employers who don’t pay their staff through a PAYE scheme is currently set for 1 April 2017.
By Phil Smith