The workplace pension juggernaut rolls on and is proving to be a major success. Since the project began back in October 2012 over 8 million employed individuals have been auto enrolled into a qualifying pension scheme, most for the first time ever.
The not so good news is that many small employers are struggling to complete their workplace pension duties in time for their staging date. A recent report published by leading group scheme provider Aviva highlighted around one in six businesses are missing their deadline.
The repercussions are severe both in time and in cost. The Pensions Regulator (TPR) is imposing record numbers of fixed penalty fines of £400 on defaulters and then a minimum £50 per day for those who fail to fix the issue in good time.
To demonstrate that TPR is not prepared to tolerate inaction it regularly publishes information on recent default scenarios. For example, a high street footwear firm turned a £400 fine into a bill for more than £40,000 after claiming it was too busy to meet its pension responsibilities.
Johnsons Shoes Company was issued with a £400 fixed penalty notice after it failed to comply with the law on the automatic enrolment of its staff into a workplace pension. The company had been required to check whether its staff qualified to be put into a workplace pension scheme and to confirm to TPR that it had done so.
Johnsons paid the £400 fine but still did not become compliant. Despite repeated reminders – and being warned that it would face a new fine that would increase by £2,500 per day if it did not meet its responsibilities – the Shepperton-based business continued to flout the law.
The fine reached £40,000 before the company finally became compliant. At that point, Johnsons refused to pay the fine – forcing TPR to take the business to court to secure payment. Eventually Johnsons agreed to pay the £40,000 fine and £2,000 court costs, preventing the need for a full court hearing on the matter.
Charles Counsell, TPR’s Executive Director of Automatic Enrolment, said:
“The failure by Johnsons to act, despite our repeated warnings, left it with a completely unnecessary bill that was more than 100 times the amount it was originally fined’’. He added “The vast majority of employers meet their automatic enrolment responsibilities. We will use all the powers available to us against the minority who choose to ignore their duties’’.
“Our message is clear: fail to comply with the law and you may be fined. Fail to pay your fine and we may take you to court.”
The Regulator inspection teams will be visiting hundreds of businesses across the country over the coming months to check that staff are being given the workplace pensions they’re entitled to.
To the uninitiated it all looks complicated and very involved. The truth is it needn’t be if you plan early and recruit the best advice. Matching the most suited pension scheme provider with your existing payroll is key. Business owners who make random choices without conducting in depth research or seeking professional guidance could spend a long time hammering a square peg into a round hole.