The UK’s small and micro businesses face being slapped with around £25m of fines for missing the government’s auto-enrolment deadline, according to payroll and pensions platform Paycircle.
Between now and 2018, some 1.8 million employers will begin to ‘stage’ (be required to set up a workplace pension), but Paycircle stated based on fines handed out by The Pensions Regulator to date a large number of small and micro businesses will miss their target and face a £400 fixed penalty.
According to The Pensions Regulator’s data, of the 63,700 companies that have staged since July 2012 more than 95 per cent have complied with the law.
The rest have been handed fixed or escalating penalties.
If the current rate of fines being handed out continues, then between now and 2018, Paycircle calculated an estimated 63,000 small and micro UK employers – roughly 3.5 per cent of those due to auto-enrol — will receive fixed non-compliance fines totalling more than £25m.
This fines warning follows recent TPR findings showing 40 per cent of micro employers (those with one to four members of staff) will turn to external advisers for advice, spending around £317m between now and 2018.
Coupled with the estimated £25m of fines, the cost for small UK firms to comply could be as much as £350m.
Catherine Pinkney, co-founder of Paycircle, said: “Not only will many of the UK’s smallest businesses face significant set-up costs for their workplace pensions, but a large number, according to the latest data from The Pensions Regulator, will also receive a fixed penalty fine.
“In reality, the percentage of smaller employers that incur a penalty is likely to be higher than the rate to date as smaller companies have less people and time for administration duties. Now is the time for small firms to be proactive about auto-enrolment, or face fines that can rapidly escalate.”
Daren O’Brien, director at Aurora Financial Solutions said: “It doesn’t surprise me that so many SME’s are fall foul of the regulations and being fined.
“Most know what their main responsibilities are but find it really difficult to get over that last hurdle of actually selecting a scheme and implementing it. That’s why we’ve had so many new clients approach us recently to help with this last hurdle.”
ruth.gillbe@ft.com