Tuesday, 16 September 2014
Pensions rules could be costly
New rules mean every employer must enrol workers into a workplace pension scheme if they are aged between 22 and state pension age, and earn more than £10,000 a year.
And employment law expert John Mehtam, of Martin-Kaye Solicitors in Telford, said there were some hefty fines being lined up for companies which were failing to comply.
“Fines of £400, plus a further £50 per day, can apply to a company which is not complying with its auto-enrolment duties,” he said. “For now, the regulator will probably forego them if you prove you are acting quickly – but the honeymoon period is not going to last forever.
“Last year, household goods chain Dunelm found itself on the wrong end of the pensions regulator’s enforcement action after a report said it had failed in its auto-enrolment duties.
“It could have landed the company with hefty fines, and action could have also been taken against directors. But Dunelm acted swiftly to put matters right and the company and its directors walked away red-faced, but scot-free. It goes to show, though, that no company is too big, or too small, to be targeted.”
John said: “The regulator wants to see businesses beginning the planning process a year ahead of when they legally need to register. If your company is late starting the process, the most important thing is not to stick your head in the sand. Contact a pensions professional – or the regulator – to find out the most efficient way of getting on track.
“Remember, directors can be held personally responsible for any failures to comply with the rules, if it can be shown that they were aware of the situation. And in the most serious of cases, that can mean criminal proceedings.”
The automatic enrolment system began at the beginning of October 2012 with staff who work for the biggest businesses, with others being signed up over the following six years. It means millions of workers in the UK will see a slice of their pay packet being automatically diverted to a savings pot for their retirement.
Employers are obliged to pay into the fund as well, with the government adding a little extra through tax relief. Workers who already save in an existing pension scheme, or are self-employed, will not be signed up.