If you want to avoid a fine for failing to set up your workplace pension, don’t make the same mistake as Swindon Town F.C. and drag your heels. That’s the message from pensions expert The Auto Enrolment Advisor in the light of alarming new statistics surrounding so-called auto enrolment.
Figures just released from The Pensions Regulator (TPR) show an alarming rise in the first quarter of 2016 for warning notices and fines, the sort issued to football club Swindon Town for repeatedly failing to comply with the new law surrounding auto enrolment. The law requires every business in the UK to enroll eligible employees in a qualifying workplace pension scheme.
The statistics show a spike in the number of warning, or compliance, notices issued over the last quarter; a startling upwards trend for warnings over the last six months; and a tripling in the amount of fines collected these last six months.
The fact that only small and medium sized businesses are now working towards auto enrolment (larger employers have already signed up) makes the figures even more worrying, says The Auto Enrolment Advisor, which warns of the possible financial impact on a smaller business.
Although the TPR figures show a 90% compliance rate for businesses creating pension plans, they also show:
- 806 fixed penalty notices, carrying a £400 fine, were issued to small and medium-sized businesses from January to March 2016. That compares to 1,428 fixed penalty notices issued in the previous three and a half years to larger businesses, who were the first ones bound to comply with auto enrolment.
- Fixed penalty notices have been showing a steep rise for the last six months. The amount of fixed penalty notices that went out between October 2015 and March 2016 account for 82% of all the fixed penalty notices distributed since auto enrolment began three years ago.
- In the six months between September 2015 and March 2016, TPR sent out 5,653 compliance letters, or warning notices, to small and medium sized businesses (SMEs) – the equivalent of 31 letters per day. That’s compared to 2,181 warning letters in the last three years, and an average of just two a day issued to larger employers.
- From January to March 2016, the number of escalating penalty notices like the one issued to Swindon Town – carrying daily fines that can run into the thousands – jumped to 96. That’s a spike of 300% from the previous 42 months.
- There were 120 escalating penalty notices issued in the last six months. Up until September 2015, only seven of these notices were served.
While Swindon Town F.C. settled its fines of more than £22,000 in February, the statistics show a worrying a trajectory for small and medium sized business owners setting up their employees’ pensions, says The Auto Enrolment Advisor. Warning that the heavy fines are going to hit smaller businesses harder, the pensions expert urged employers to “be a Leicester City, not a Swindon Town”, in a nod to Leicester City’s recent victory in the Premier League.
Graham Robinson of The Auto Enrolment Advisor said:
“With all that’s happening in the football leagues right now, there are messages that could be applied to employers when it comes to workplace pension sign-ups. Just as a football club needs a talented and satisfied team and to make its supporters happy, so an employer needs to maintain the backing of its staff, and in turn satisfy customers. In other words, they want to end up as popular as Leicester City, not in a mire of negative headlines like Swindon Town. And they certainly don’t want to drag their heels so much that they face their own form of ‘relegation’ like Dundee United!
“On a serious note, the auto enrolment compliance rate of 90% should be celebrated as it’s a far greater level of compliance than naysayers were predicting. But with a huge surge in warning letters going out, it’s clear that more needs to be done so that small and medium sized businesses don’t end up facing a fine like Swindon Town.
“To put The Pensions Regulator’s statistics in financial terms, in the 3-year period from when auto enrolment began until September 2015, The Pension Regulator collected £229,200 in fixed penalty notices. From October 2015 to March 2016 TPR collected £730,800.
“What makes these figures distressing is that in the last 6 months it was solely small and medium sized businesses that had to comply with auto enrolment. A fine of £400 means an awful lot more to a smaller firm than it does to the mega firms who pioneered auto enrolment.”
- For more on auto enrolment and the full version of the article visit The Auto Enrolment Advisor at theautoenrolmentadvisor.co.uk
- The Auto Enrolment Advisor will take part in Staging Fright? Everything you need to know about auto enrolment, two events held by Perthshire Chamber of Commerce and Forth Valley Chamber of Commerce on Tuesday 31st It will also hold free surgeries in Perth on the same day. For more information and to book email email@example.com