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Auto Enrolment: Pensions Regulator puts the boot in!

Are you up to date with the law on your pension auto-enrolment responsibilities for your staff?

If not, then it might be an idea to get sorted as it appears The Pensions Regulator (TPR) is starting to flex its muscles – and it could cost you dear with one firm just having to pay out £40,000.

Under the Pensions Act 2008, every employer in the UK must put certain staff into a pension scheme and contribute towards it – it’s called automatic enrolment.

Whether you’re a hairdresser, an architect or have a personal care assistant, if you employ at least one person you are an employer and you have certain legal duties.

High street footwear firm Johnsons Shoes Company has just fallen foul of TPR for failing to comply with the rules, and it has cost the firm £40,000.

It was initially issued with a £400 fixed penalty notice by TPR over its failure to comply with the law on the automatic enrolment of its staff into a workplace pension scheme.

This required checking whether its staff qualified to be put into a workplace pension scheme and confirming to TPR that it had done so. Johnsons paid the fine but still didn’t obey the rules.

Despite repeated reminders – and being warned it would face a new fine that would increase by £2,500 per day if it did not meet its responsibilities – the firm continued to flout the law.

Eventually the firm sorted itself out, but not before the fine reached £40,000. It refused to pay, so the TPR instigated court proceedings to collect the cash. The company eventually agreed to pay the £40,000 fine and £2,000 court costs, preventing the need for a full court hearing.

TPR executive director of automatic enrolment Charles Counsell said: “The failure by Johnsons to act, despite our repeated warnings, left it with a completely unnecessary bill that was more than 100 times the amount it was originally fined.

“The vast majority of employers meet their automatic enrolment responsibilities. We will use all the powers available to us against the minority who choose to ignore their duties.”

He added: “Our message is clear: fail to comply with the law and you will be fined. Fail to pay your fine and we may take you to court.”

According to latest figures over half a million employers are now set-up for auto-enrolment, but the TPR thinks there are still a million who have yet to meet their responsibilities.

Firms have been warned by the TSR

  • If you don’t comply, you may face enforcement action including compliance notices, and penalty notices (fines).
  • If you comply late, you are expected to pay back any missed contributions to put staff in the position they would have been in if you had complied on time; this would include backdating contributions to your staging date.
  • You are expected to inform staff that they have the option to backdate their own contributions to your staging date.
  • If you don’t pay your fine, we can recover the debt through the courts.

The rate of any escalating penalty notice for failing to comply by a certain date can range from £50 to £10,000 depending on the number of staff you employ – in the case of Johnsons above it was £2,500 a day.

Avoid the risk of a possible Pension Regulator fine.

Speak to Innes Reid on 01244 347583 or by email to info@innesreid.co.uk about our simple one-stop-shop auto-enrolment solution – whether you employ one person or a thousand!

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The Financial Ombudsman Service (FOS) is an agency for arbitrating of unresolved complaints
between regulated firms and their clients. Further details of the FOS can be found on its website:
www.financial-ombudsman.org.uk