With auto-enrolment (AE) well under way for the UK’s largest businesses, over the next three years an additional 800,000 smaller employers (with less than 60 employees) will start their journey to comply with the legislation. AE mandates all eligible employees and their respective employers to make regular pension contributions into a qualifying pension scheme. To learn more about the legislation read our brief Jelf AEase — simple steps to AE compliance guide.
At the end of 2014, The Pensions Regulator (TPR) reported that it had issued 1,139 warning notices to UK businesses and, of those, 169 firms received fines for AE non-compliance. This announcement was a clear message to all that failure to comply would result in action and, potentially, a penalty for every day of non-compliance. Added to this was that those fined were some of the bigger firms in the UK, which you would typically expect to have this area covered.
As smaller companies start to auto-enrol, TPR fully expects the number of firms that leave it too late or fail to act at all to rise significantly. One major AE scheme provider has said that of the 4,279 companies that signed up with them in 2014:
- 17 per cent left it until the last minute or missed deadlines, of which:
- Nine per cent contacted the provider in the month of their staging date
- Eight per cent left it until after their staging date had passed
- 20 per cent signed up six months or more in advance of their AE date — the timescale recommended by TPR
The final point is an important one to note. More than 800,000 businesses will need support to comply with this legislation, as it is bound with decisions, rules and significant ongoing monthly (or in some cases weekly) assessments of workers. When we get into 2016 and 2017, the volumes move from thousands of businesses staging each month into tens of thousands. So what does this mean for you and your business? Leaving enough time and making prior arrangements to receive full support couldn’t be more important to ensure your business is looked after well in advance of your staging date.
What happens next?
TPR will be writing to all businesses yet to stage in the next few months in an attempt to promote this early action. Keep an eye out for this letter as it will contain specific details about the date by which your business will need to comply. As a leading employee benefits consultancy, we have developed cost-effective solutions for smaller businesses and can help to take the pressure off.
For further information about how Jelf can help get your business AE ready, speak to our dedicated AE team on: