This post applies to more than 99 % of U.K. businesses. It is imperative to prepare for the Auto Enrolment of your employees into pension schemes as Auto Enrolment dates loom next year. A corporate accounting firm is important to help with arrangements. You don’t want your business to be left behind and be fined due to non-compliance.
Auto Enrolment for your small business
According to a July 2015 report from the Pensions Regulator, over 5.2 million workers have been successfully auto enroled since 2012. The financial services sector is bracing for a barrage of requests coming from companies with 30-49 employees, with Auto Enrolment dates coming between August and October 2015. This is only a short time away. The right Chartered Certified Accountants can help mitigate the undue stress that will be placed upon these businesses.
That doesn’t mean that smaller businesses are off the hook either. Businesses with fewer than 30 employees had the possibility of being pre-selected for an even earlier Auto Enrolment date of June 2015. If your business has not been pre-selected, then you could be auto-enrolled as early as November 2015, but HMRC can pick any date up to the end of 2017. The most important thing is to find out when your Auto Enrolment dates are and begin the process of compliance. This applies to all businesses, as your number of employees can change in the coming months and years.
Pensions Regulator estimates that 20% of small employers and up to half of micro employers are completely unaware of their Auto Enrolment dates. Many businesses are unaware that their staging date is not based on the current number of employees they may have, rather it is solely based on the numbers recorded in April 2012 via their PAYE reference. Those who have had large or even small changes to their numbers of employees may be in for a surprise in the coming months.
Much like holiday shopping, some may still be aware, but put it off until the last possible minute. Hoping it may magically be fixed is not the answer. The only answer is to hire the right accounting firm, and leave it up to the professionals. Remember, this is not a one-time process, Auto Enrolment requires ongoing project management, coordination and administration to ensure that you remain compliant with the Pensions Regulator. You may think this issue only concerns pensions, but actually Auto Enrolment is about payroll, insured benefits, flexible benefits, salary sacrifice, risk, data, HR systems, processes and more.
Our recommendation is to start planning 12 months ahead of your staging date to ensure your company is compliant. Now, looking at the staging dates above, many companies staging dates are much less than 12 months away. This means you may need to start planning as soon as possible to make sure you are doing what is best for your business, your employees, and yourself. This planning period is important to make sure your business is not only compliant as of the staging date, but also continues to be compliant in the coming months and years.
The responsibility for complying with the employer duties rests solely with the employer, not with the employees. So what are the penalties for not complying with this system? Well, you can face enforcement action in line with the Pensions Regulators risk-based approach. Enforcement action starts with statutory notices followed by penalty notices. At this point, further non-compliance results in court action.
The law, however, will be enforced in a fair and objective manner. If you have extenuating circumstances, The Pensions Regulator will help you get compliant. You will receive multiple warnings. The penalties will begin to punish persistent and deliberate non-compliance. You will not be punished with court action unless you willfully and deliberately ignore all warnings, notices and compliance deadlines. Failure to fulfil your employer duties may result in criminal prosecution.
This is why it is important to hire a Chartered Certified accountancy firm to handle this very important issue for you. The Pensions Regulator is not trying to hurt you or your business; they just need you to comply with the law. Don’t let ignorance of the laws prevent you from running your business. Hire the right people for the job. Make sure that you not only comply with the law before the deadline dates, but that you also continue to be compliant in the coming months and years. This will ensure that you can continue to happily run your business and be profitable, without undue stress, fines, or legal action brought upon by non-compliance.