Around half of all businesses who have complied with their pension’s duties have said they wished they had left more time to prepare. Executive director of automatic enrolment Charles Counsell is now calling on small and micro employers to learn from their experience and avoid a last minute rush.
“Currently around half of micro employers and 20% small employers are not clear about when they will need to act. To help employers avoid the mistake of failing to prepare on time, The Pensions Regulator is sending out letters to alert all employers to when their automatic enrolment duties start.
The letters will alert employers to their staging date, which is when an employer’s legal duty is switched on. They will arrive over the coming months and also ask employers to nominate a contact. This is so that the regulator can email them important information about what they will need to do to comply.
Compliance and enforcement
As part of the regulator’s educate and enable approach we regularly update our communications, including refreshing our website to make it more user friendly for small and micro businesses. Alongside our communications however, our compliance and enforcement team works to identify non compliance and will take action where an employer is at risk of failing to meet their duties.
Last month, the regulator published its quarterly declaration of compliance bulletin which showed the number of times we have used our powers to tackle non compliance. As expected, the use of our powers has risen significantly as the numbers of employers needing to comply increases and the employer type changes. There are those who, despite our message to prepare early, leave it too late or do not prepare at all. We want to work to enable employers to meet their duties, but deliberate non compliance will not be tolerated and employers who fail risk financial penalty. We want to ensure that workers get the pension contributions that they are entitled to.
Declaration of compliance
With the aim of helping small employers learn from others and avoid non compliance, the bulletin also highlights the main reasons why we have needed to use our powers. One of the main ways some employers were caught out was because they failed to meet their declaration of compliance deadline. The declaration of compliance must be completed five months after the staging date.
Steps towards compliance
Employers should start planning for automatic enrolment 12 months before their staging date. They will need to ensure all their staff records are up to date and have a pension scheme in place six months beforehand. They should also ensure their payroll solution has the capability to carry out automatic enrolment processes and is compatible with other systems. The way to ensure this is to test systems well in advance of the date they will need to be ready.
The roll out of automatic enrolment has so far been successful with the majority of employers meeting their automatic enrolment duties without the need for us to use our statutory powers. Our research also shows us that most employers want to do the right thing by their staff. My message to small and micro employers is to keep an eye out for the letter from us and to take action.”
To find out more about auto enrolment and what to do if you’ve missed your staging date visit our workplace pension area that’s packed full of information on what happens after your staging date to how to set up a pension scheme and more.