14th February 2019
Auto enrolment is proving a challenge for many companies across the UK, particularly for SMEs. The Pensions Regulator (TPR) is now cracking down on it even more.
In October, four members of a recruitment company based in Derby became the first in the UK to be given a suspended prison sentence for not following the pensions auto enrolment receiving a fine of over £280,000 and in November a Great Manchester bus firm pleaded guilty to a total of 16 offences of not putting members of staff into a workplace pension. In these particular cased it was found that the companies had illegally plotted to opt staff out of the company pension scheme. However, TPR fines for more innocent mistakes are now increasing, with £42 million worth of fines being given in the last financial year and most of those fined were SMEs.
As an employer, you need to ensure you are complying to the law on auto enrolment and workplace pensions. If you don’t you could be facing some hefty fines in the future. Not only this but you will be named and shamed, as the regulator will publish your company details online explaining what penalties you owe and why. This can ruin your company’s reputation and can result in the loss of business. You can’t claim ignorance in regard to auto enrolment and complying is the company’s responsibility as a whole.
So why are mistakes being made?
The auto-enrolment deadline was a mad scramble for most companies with many working hard to ensure they were compliant when it came into play. Now the hype of this has died down and this has led to a lapse in momentum leading to more mistakes.
You need to ensure all the personal details in your payroll system are correct. FT Advisor reported that there were issues with 50% of the information reported in 10,000 companies pension schemes. Some mistakes included the contribution amounts being too high or too low, incorrect pay period dates and workers who do not belong to the scheme or have opted out still being included.
Not checking regularly
For most companies they only time they realise they have made mistakes in their auto enrolment is when the TPR fines them. These mistakes can go unnoticed for years, slowing building up the number of errors that have been made and can lead to bigger fines and more trouble. Having regular checks on your payroll and in particular looking at your auto enrolment to ensure it is right is necessary to ensure you avoid these fines.
No expert knowledge
Many companies, mainly smaller businesses don’t have expert knowledge surrounding payroll legislation such as auto enrolment and don’t even have a payroll team or manager. Not having this expertise is usually the main reason companies are making these mistakes and receiving these fines.
Outsourcing payroll can help ensure that all of these causes are no longer an issue. Using a provider who has trained expert professionals looking after your payroll who can dedicate their time to your payroll can help prevent any mistakes and stop and fines in the long run.
Auto Enrolment for Micro Businesses?
If you are an SME or micro business read our eBook on how to manage your auto enrolment.