The number of businesses falling to meet their auto enrolment (AE) staging dates is increasing, and so are the consequences.
2017 is arguably the biggest year in auto enrolment history, with a further 600,000 small and micro-sized businesses due to start the process.
As we near towards the long-anticipated “capacity crunch” in the market, for many businesses, meeting their staging dates for workplace pensions is a serious concern. However, data trends from pension providers indicates otherwise.
According to new figures from Aviva, as many as one in six businesses failed to meet their staging date, with the first quarter of 2017 seeing a 15% rise in delayed applications compared to the same period in 2016.
The implications of missing a staging date can result in severe repercussions: the domino effect of a firm’s failure to comply with the Pensions Regulator (TPR) rules can not only be a lengthy process, but can also disrupt communication and be of great expense for the organisation.
For many businesses staging for the first time it is imperative they are aware of their responsibilities, are compliant with the regulations and act promptly to run the risk of being fined.
Executive director of automatic enrolment Charles Counsell said that employers “must prepare and they will be looking to advisers to help them”. Therefore advisers, including accountants, must familiarise themselves with AE and work closely with clients to meet their pension duties.
Steve Brice, a senior consultant at LP Auto Enrolment Solutions, highlighted the difference in penalties for firms missing their staging dates. For those more than three months out, the regulator “not only expects you to backdate all employer contributions, but will in all probability expect you to pick up the tab for all eligible employee contributions up to the date of the assessment,” Brice said.
A further five months after the staging date and the regulator will request a reason for the delay, and later may impose fines starting with a singular £400 and then charges of up to £500 per day.
Brice warned that late stagers “may also fall foul of HMRC”. If employers with a staging date pre-April missed this deadline, they can be forced to re-run payroll and correct HMRC submissions for the relevant tax year. In turn, this can mean additional pension contributions on behalf of employees, but also fines to HMRC for delayed or false PAYE submissions.
The regulator added: “Some employers may see becoming compliant as a challenge but we are here to help them to meet their responsibilities”.
Have any of your clients missed their AE staging dates? What did you do to help them?