Employers must allow enough time to prepare for their pensions auto-enrolment deadline. If they don’t, they risk an unnecessary fine.
An increasing number of employers are failing to comply fully with their pensions auto-enrolment requirements in time, data from The Pensions Regulator (TPR) shows.
In the last quarter of 2014, TPR served 166 firms with £400 fixed penalty notices for some form of compliance failure – a dramatic increase on the three fines issued in the previous quarter. The regulator also issued 1,139 compliance notices, which instruct an employer to remedy a contravention of one or more of their employer duties or risk a fine or further action from the regulator. A significant number of the notices were to employers who had missed their deadline to submit their declaration.
The rise in fines and compliance notices reflects the increased numbers of employers whose pensions auto-enrolment staging date fell between April and July 2014 – a total of around 30,000 medium-sized employers (each with around 62 to 149 workers). Employers have five months from their staging date to complete their declaration of compliance.
We can help employers to meet their auto-enrolment obligations – and the sooner they act, the better, to ensure compliance. “Our advice to employers is to start preparing early in advance of their deadline,” says Stephen Humphreys, partner and head of our Wealth Management department. “Taking action a year in advance is ideal, but employers should allow, as a bare minimum, three months to get everything set up.”
TPR estimates that more than 1.3 million employers need to comply with their new workplace pensions over the next three years and declare compliance. As increasing numbers of smaller employers reach their staging date, the regulator expects to see more employers who, despite the message to prepare early, leave it too late or do not comply at all. The regulator’s own research shows that the majority of employers who have completed the automatic enrolment process regret not allowing more time.
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