Pension Auto Enrolment FAQ 1.0 : Avoid Penalties of £500 per day

As you’re no doubt aware, new pension regulations require you to enrol your workforce into a pension scheme sometime between today and October 2018.

In our series of auto enrolment FAQ’s, we’re now looking at the threat of penalty.

With any new regulations, there is always a threat of a penalty – but of course we all presume that the penalty will never apply to us.  Surely the Pensions Regulator (TPR) will be far too busy to penalise my business – right?

Unfortunately, it looks like statutory notices which will give rise to penalties are going to be issued. This means you could be looking at a fixed £400 penalty followed by daily penalties of between £50 and £5,000 per day! If you have between 5 and 49 employees the penalty is £500 per day!

Some of the large UK employers have already received statutory notices  – either because they have not complied, or they have complied but their record keeping is not up to standard.

We will be covering this more in a future blog post, but to get you started, here are a few ways you can ensure you are not going to have to pay penalties:

  • Make sure that you offer some kind of a pension scheme to all employees, and pay a contribution towards it
  • Determine whether the contribution you pay is enough to fit a “qualifying scheme”
  • Refer to pensions in the contract of employment you use for employees. (Be careful how much information you give, though – you can talk to us if you’re not sure.)
  • Inform employees of their right to opt out
  • Keep records of what you have done to comply

Naturally, you can talk to us about how auto enrolment affects you. We’ll evaluate how it applies to your specific business, the employees you have and how it affects them, and what you need to do.

Whatever you do, don’t choose the ‘nothing’ option…that way penalties lie!