The Managing Director of a Lincoln-based HR management company has warned businesses there is no excuse for not having set up auto enrolment for its staff.
A report released by The Pension Regulator has said that 3,728 businesses across the UK were issued Fixed Penalty Notices or fines of £400 for failing to meet their auto enrolment duties in Q3 of 2016.
Neil Buck, Managing Director of The Personnel Department, said: “The report highlights that explanations given for non-compliance such as illness, being short-staffed, or confusion between employers and their advisers, are not a ‘reasonable excuse’, and simply won’t cut any mustard.
“It’s vital that employers know their ‘staging date’, get proactive and start looking at their compliance obligations ASAP to avoid any ‘Compliance Notice’ or ultimate fine from The Pension Regulator.”
The rise in penalties demonstrates that the small minority of employers who fail to heed warnings from The Pensions Regulator (TPR), are subject to penalties.
It comes as there was a 50% increase in employers reaching their deadline to comply with automatic enrolment duties.
While the number of Compliance Notices issued has risen to more than 26,000, fewer than 5% of these progressed to an escalating penalty.
Several employers who, after receiving a £400 Fixed Penalty Notice, have claimed their non compliance was unintentional and that they had a ‘reasonable excuse.’ The employers requested a review of the decision and went on to contest their fines at a tribunal.
In each case, the judge ruled their reasons did not amount to a ‘reasonable excuse’, in the sense of something unexpected and outside the employer’s control that stops them meeting their statutory duties.
It would have been possible for the employer to comply despite the problems that they faced, so ultimately the fault rested with them.
Neil added: “The important thing is to get the right pension scheme in place at the right time for the right employees as this enrolment duty is one thing a business owner cannot afford to sit on and ignore.
“Staff now know about it and expect it to be offered, even if they don’t end up contributing.
“There are three common qualifying auto-enrolment pension schemes – NEST, Now:Pensions and The People’s Pension.
“These are meant to be self-administered but in my experience most business owners are using advisors to help them set up and then administer the scheme which does unfortunately increase their employment costs.
“However, there may already be a pension scheme in place which is compliant so they should speak to their current provider first of all if so.”