Auto enrolment is seen by small businesses as a hassle and a cost. Every new initiative that is rolled out where the business owner has to carry out an additional task is a burden. Where before there was no onus on the business to provide a pension for their team, now there is. This means paperwork, decisions and consultations before we even get to the issue of employers’ contributions. But getting auto enrolment right isn’t the real potential cost in all of this – getting it wrong is far more of an expensive proposition.
With the last tranche of businesses required to comply with the auto enrolment legislation by February 2018, the news is starting to seep its way through to the small business community. It is tempting to bury your head in the sand and hope that it all goes away, but this isn’t going to happen. Take a look at the fines being handed out and you can see that getting auto enrolment right is far less expensive than getting it wrong.
What are the potential penalties?
This all depends on the size of your business, but can run into the thousands pretty quickly if you don’t act. The Pensions Regulator has the force of the law behind it, so non-compliance isn’t an option you should consider. Getting auto enrolment right is the only way to go with this.
There are several stages that the Pensions Regulator can go through to bring your business in line if necessary. These include –
- A warning letter – usually at the start of the process
- A statutory notice that requires you to act by law
- A fixed penalty notice of £400 for not complying on your staging date (more on this later)
- An escalating penalty notice of between £50 and £1,000 PER DAY that you are non-compliant
I’m sure you can now see why we say that getting auto enrolment right is far less expensive than getting it wrong. After you have come back into line, the payments that were missed will have to be backdated. There’s no benefit at all from ignoring your obligations for the pensions of your team.
What are the actual penalties?
There have been some high-profile cases where an employer has failed to act and ended up in trouble. Swindon Town were faced with a penalty of over £22,000 for failure to comply with the regulations. The Pensions Regulator said of the case, “Failing to comply on time will not save you money. Not only do you risk a fine, you will also have to make back dated contributions.” The fines were made up of –
- A £400 for missing the initial deadline
- Penalties of £2,500 per day for each day it failed to comply
You can see why getting auto enrolment right is an easier way to do business than getting it wrong. The publicity, the reputational damage and the stress cased to employees are all other factors in why ignoring the rules can cause you a major headache.
Getting auto enrolment right
Here at Harlands, we are experts in getting auto enrolment right for our clients. Just get in touch with us today to find out how we can help. As a small business you will need to follow certain steps to ensure that you are compliant with the law in this area, including –
- Knowing your staging date (the date when you need to have your pensions set up for your team)
- Choosing the relevant auto enrolment scheme for your team
- Speaking to your team so they understand what it is all about
- Answering any questions
- Keeping records
- Processing the payroll
But don’t worry about it. We have got your back. There is enough for you to do with your business without having to go through all of these decisions and consultations. Let Harlands deal with it all for you. We will assess all of this on your behalf so you can concentrate on what you do best – running your business. Call the Harlands auto enrolment team today and we will take the strain. You don’t have to worry about your auto enrolment plans – you are in good hands.