New research from the Federation of Small Businesses (FSB) has revealed that 4 in 5 Kent small businesses will struggle to put pension reforms in place because the process is too complicated.
The process, known as Auto Enrolment, was introduced in October 2012 as part of the government’s plan to ensure that all workers save toward their retirement. It requires all businesses to enrol all eligible staff into a workplace pension scheme if they are aged between 22 and State Pension age or earn more than £9,440 a year and work in the UK.
And by 2018 every eligible employee across the UK will have to be enrolled with both employers and employees making pension contributions towards a pension pot unless an employee chooses to opt-out.
Data from The Pensions Regulator’s quarterly compliance for the period January to March 2015 shows that a total of 213 compliance notices and 198 fixed penalty notices were handed out, along with nine unpaid contributions notices. FSB said that many Kent employers are expected to suffer eye-watering penalties if they continue to not comply.
According to FSB over 56,000 small and medium businesses in Kent, i.e., those with 50 to 249 employees, had a staging date between April 2014 and April 2015. Those who ignored the Pension's Regulator's first request had to pay an initial penalty of £400, rising each day, seven days a week. Those who persistently breach compliance notices will face harsher penalties: £2,500 a day for those with 50-249 staff, escalating to a massive £10,000 a day for those with over 500 workers.
Gaps between employers’ assumptions before staging and the reality, lack of resources, and lack of knowledge about pensions have been highlighted as the main challenges. To that end FSB has been running auto enrolment seminars across Kent to help businesses get to grips with the pension rules.
We encourage Kent businesses to plan ahead; auto enrolment is complex and the penalties are huge. To help employers comply with their legal duties, the Pension’s Regulator has published an online registration checklist on its website detailing all the information they need. For more information about seminars across Kent call FSB on 01622 754 508 or click the following link to find out the top 5 ways to reduce potential costs of auto-enrolment.