One in five employers is failing to sign its employees up to an auto-enrolment pension scheme, putting them at risk of hefty fines from The Pensions Regulator, according to figures released by AE master trust Now: Pensions.
In the second quarter of 2016, Now: Pensions reported 21 per cent of the companies that signed up with them did so after their deadline, which it said was the highest percentage they had seen. In the corresponding 2015 quarter, only 13 per cent missed their staging date.
Of the companies that did meet their staging date on time, a quarter did so at the last minute, waiting until a month before their staging date to sign up to the scheme. At the other end of the spectrum, however, 34 per cent of businesses signed up six months or more before their staging date.
Large and medium-sized businesses have now all staged, leaving only the UK’s smallest businesses left. Now: Pensions’ figures suggested these very small businesses were the least prepared for the new regime.
Businesses that miss their staging date receive a 28 day warning notice from The Pensions Regulator. If they ignore it they are charged a £400 fine, and are liable to be fined an additional £50 a day for companies with fewer than five employers, or £500 a day for those with between five and 49 employees.
Morten Nilsson, chief executive of NOW: Pensions, said: “As time goes by, it’s becoming increasingly clear that when it comes to auto enrolment, smaller employers are divided into planners or procrastinators.
“While it’s worrying that one in five are missing their staging date, it’s also reassuring to see that a third are planning well in advance.
“Small business owners have a lot to think about and it’s easy for auto enrolment to be put on the back burner but the fines for non-compliance are steep missing the deadline can cause unnecessary sleepless nights.
“Auto enrolment is complicated so the longer firms leave to tackle it, the more confident and comfortable they’ll be able to feel.”
Laurence Sanderson, an independent financial consultant with Sterling & Law, said he was “not surprised at all” by the number of small employers missing their staging date.
“A lot of employers are plodding along in blissful ignorance that they have already missed their staging dates,” he said.
He said one of his clients had confused their staging date with the due date for their statement of compliance to TPR - which is due five months after staging. He said TPR only knows whether or not an employer has complied with AE after it receives a statement of compliance, meaning many employers only realised they’ve missed their staging date five months after the fact.
He warned advisers that they “will be fined” if they miss the date, adding he expected the volume of fines to increase next year.
He added that the onus was really on the employers and their accountants and advisers to make sure they are compliant, because TPR had done as much it possibly could to make businesses aware of the new rules.