All employers have a legal duty to automatically enrol certain staff into a workplace pension scheme by a deadline that is specific to them. This includes small businesses – from chip shops, to florists to news agents and pubs. The law also applies to employers who have one worker – for example a personal assistant.
A national print and radio advertising campaign launched this autumn by The Pensions Regulator has called on employers to take action. The message is simple: if you are an employer then you will have new duties.
The regulator has published details of its enforcement activity showing it has issued its first fixed penalty notices - £400 fines – to employers who had failed to meet their duties. The regulator has a range of powers to tackle non-compliance including serving fixed and escalating penalties notices.
The Pension Regulator’s executive director of automatic enrolment Charles Counsell said: ‘Tens of thousands of small employers will be required by law to automatically enrol their staff from June next year. Smaller businesses may be more likely to leave things until the last minute which will put them at risk of enforcement action by the regulator. The regulator expects that with significantly more employers subject to the new duties, it will use its compliance powers more frequently.
‘Starting plans in good time however can help avoid the risk of non compliance. Larger businesses which have already introduced automatic enrolment agree it’s wise to plan ahead and take a step by step approach.’
Research by the regulator has shown that 20% of small employers and 40% of really small employers (those with up to four workers) do not know their staging date. The staging date is a date set in law and is when an employer’s legal duty starts. There are a number of tasks employers will need to do before this date however and the regulator recommends making a start 12 months beforehand.
It is vital employers do not guess their staging date. They should use the staging date tool on The Pension Regulator’s website. It takes just a few minutes but they should have their PAYE details to hand. Employers can then use the handy time line planner tool which will help show what they will need to do and by when.
There is lots of information on the regulator’s website and it has recently been refreshed to make it easier for small employers to use. .
Employers should consider whether they need to find an adviser, such as an accountant or bookkeeper to help them. They will also need up to date information about their staff and they should check if any existing payroll arrangements are suitable for implementing automatic enrolment. A pension and payroll system should be in place at least six months before their staging date. As thousands of employers will be doing the same it makes sense not to leave these tasks to the last minute.
Five months after the staging date, employers must complete a declaration of compliance with The Pensions Regulator. This is a statutory requirement.