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Auto Enrolment Enforcement & Penalties

July 2017

Most of us have now heard of or been involved with auto enrolment. This is the new government initiative to help everyone save for their retirement. On your staging date it is mandatory for all eligible workers to be enrolled on to a work place pension scheme where both the employer and the employee must contribute. Auto enrolment is a phased process with the last remaining employers rolling into the scheme in February 2018. If you are a new employer on or after 1st October 2017 you will immediately have legal duties for auto enrolment for any eligible workers.
As auto enrolment is mandatory there are various discretionary powers that the pensions regulator has at his disposal to ensure that employers comply. They are even able to take criminal proceedings against employers that are wilfully non compliant!
The regulator is in the first instance likely to issue a statutory notice to an employer if they have breached their duties and action is needed to remedy the breach. This may result in the employer paying both the employees and the employer’s contributions or interest charges if contributions have been incorrectly deducted or not deducted at all.
The next step would be a fixed penalty notice if the employer had failed to comply with the statutory notice or they have contravened the pensions act section with an offence that is punishable with a fixed penalty notice. The fixed penalty is £400 and it must be paid within a specified time period.
If the statutory notice and the fixed penalty notice have not worked, the regulator can issue an escalating penalty notice. The fines are escalated daily based on the number of employees and they are eye watering as you can tell from the table below!

Number of persons                                  Prescribed daily rate (£)
1-4                                                                                50
5-49                                                                             500
50-249                                                                        2,500
250-499                                                                      2,500
500 or more                                                              10,000

Please make sure that you comply with all of the auto enrolment legislation. To avoid expensive mistakes Pabsco are happy to help with your auto enrolment payroll requirements.