Providing a work place pension
With an estimated 952,000 small business expected to reach their auto enrolment staging date for their workplace pension schemes during 2017–2018, it’s likely that some will fail to grasp what is involved – and that could mean an expensive fine.
What is auto enrolment?
Auto enrolment is an initiative from the UK Government to help people save for retirement through a pension scheme at work. Employees must be enrolled if they haven’t already joined a workplace pension scheme, are aged 22 or older, are under state retirement age and earn more than £10,000 per year.ii It is the responsibility of the employer – the business – to enrol them.
Labour-only sub-contractors who are self-employed for HMRC tax purposes may still be considered an employee of your business and you may have to enrol them into your pension scheme and pay contributions on their behalf.
If they have agreed to work personally, they are usually deemed to be working under a contract of services under auto enrolment rules. They may be considered as employees and should be included in your auto enrolment scheme.
What happens if I fail to provide a pension for my employees?
In 2016, 8,314 business were issued with fixed penalty notices for failing to comply with auto enrolment.iv Penalties can be issued for deliberate non-compliance; fixed penalty notices may be issued if an employer does not comply with statutory notices or if there’s evidence of a breach of the law.
The pension regulator highlights a case of one small business having failed to make any arrangements before its staging date was due. The regulator subsequently issued a compliance notice requiring them to pay both the employer and employee contribution arrears. They failed to comply so were then issued with a £400 fine.
The business accrued a further fine of £10,000 – £2,500 per day for four days’ non-compliance – by failing to comply again. They also incurred costs of £25,400 comprising a £400 fine, a £10,000 fine, and £15,000 in employee back contributions. Expensive by any measure.
How do I set up my company’s workplace pension?
As a QANW member, you have access to Enrolsme, a dedicated online portal through which you can set up your workplace pension quickly and cost-effectively. The portal can be accessed at any time and QANW members receive a £500 discount on the set-up costs.
The process is easy to complete and requires no specialist knowledge. You’ll be asked for basic information about your employees’ pay, what contribution you wish to make and your payroll dates. The portal will then help you select the most suitable pension scheme for your business. If you find you have any questions or encounter difficulties, Enrolsme can be contacted on 020 7469 2865.
Just log into the QANW member’s area for more information on auto enrolment and the Enrolsme portal.
Enrolsme is just one of many benefits available to members of QANW. You can also get help with competitively-priced insurance including cyber cover, van insurance and access to a Tradepoint card.
If you are not a QANW member and would like more information on Insurance Backed Guarantees and becoming a member, please contact us on 01292 292701.