Small businesses are becoming more complacent with their auto-enrolment duties, according to a study.

Research by NOW:Pensions found:

• Only 35% of firms had planned six months or more in advance to register their staging date, falling slightly from 38% in Q4 and Q3 2016.
   
• Of the businesses that signed up with the pensions provider in Q1 2017, a record-breaking 46% registered their staging date either very close to, or after, the deadline.
   
• 1 in 4 (25%) missed their staging date deadline, while 21% contacted the provider within a month of the staging date.
   

Morten Nilsson, chief executive of NOW:Pensions, said: 

“It’s clear from our figures that an increasing number of firms are burying their heads in the sand when it comes to their auto-enrolment duties.

“This can be costly as The Pensions Regulator (TPR) has begun to issue Fixed Penalty Notices to employers who miss their staging date deadline which, if left ignored, can escalate into a County Court Judgement and could negatively impact the company’s credit file and their ability to secure funding in the future.

“Our message to these employers is to plan well ahead, ideally up to 6 months before their staging date, as this will ensure enough time is given to comply with their auto-enrolment duties as set out by TPR. 

“Auto-enrolment is complicated so the longer firms allow themselves to tackle it, the more confident and comfortable they’ll feel.” (See the table below for a full breakdown of the penalties.)
 

What you need to do

If you’re an employer and have yet to complete your auto-enrolment responsibilities, below is a guide to the key steps you need to take.

Start date

Your start date (sometimes called a staging date) is set by the TPR and is based on the size of your payroll in April 2012. All businesses will have reached their staging date by February 2018.

Responsibilities

Auto-enrolment applies to any worker who earns more than £10,000 a year, is between 22 and state pension age and normally works in the UK.

If any of your workers meet these criteria, it is your responsibility to:

• select and set up a suitable pension scheme,
• evaluate eligibility of staff at every pay period,
• add eligible workers to the selected pension scheme and make contributions,
• keep accurate and up to date records.

Contributions

All employers need to pay the minimum contribution based on a worker’s qualifying earnings. The current level you need to pay is 1% which is set until 6 April 2018. After this date it will rise to 2% then 3% in April 2019. 

Opting out

Employees have the right to opt out of the pension scheme once they've been enrolled.

They must provide you with an opt-out notice, which is usually provided by the pension scheme provider. 

It is then your responsibility to remove them from the scheme. Employees may be due a refund for any contributions they’ve made to the scheme.

Penalties

Failing to comply with your auto-enrolment duties will result in penalties. 

First you'll receive a compliance notice which details the problem and a timeframe for putting it right. If the matter is not resolved, you’ll receive a fixed penalty of £400.

If you continue to fail to meet your obligations, you'll be charged a daily fine as detailed in the table below:

We can help

Call us today on 01483 205890 to discuss your auto-enrolment responsibilities and how we can help.