Firms Could Be Liable For Hefty Fines‎ In The New Year

Thousands of small and medium sized businesses (SMEs) which postponed their auto-enrolment staging date earlier this year are struggling to meet tomorrow’s 1 October 2014 – says Irwin Mitchell.

According to the law firm, many of the 12,000 SMEs in the UK which employ between 62 and 89 members of staff postponed their initial staging date deadline of 1 July 2014.

It is predicted that many of these employers with a July deadline underestimated the far reaching compliance requirements and left it too late to choose a suitable product.

Those that postponed now need to enrol their staff into a suitable occupational pension scheme no later than 1 October 2014, or face the potential for a heavy fine from the Regulator.

Nigel Bolton, Pensions Partner at law firm Irwin Mitchell, said:

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Although SMEs started staging for auto-enrolment in April, the month when the largest number became responsible for the new regulations was July.

“From what we see in the market, many SMEs decided to give themselves more time to get ready. This is backed up by research which revealed that the majority of smaller firms when approaching their staging date still had not selected a suitable product, let alone decided how they were going to deal with the on-going administrative burden.

“The deadline following this three month postponement is almost with us but the fear is that many will still not be compliant.

"By failing to meet the new deadline,‎ the Regulator will have the power to hand out significant fines. Although none have so far been recorded, the SME sector could be where we see the first financial punishments in relation to auto enrolment."
Nigel Bolton - Partner

Auto-enrolment will mean that all UK employers must automatically place certain members of their workforce into a qualifying pension arrangement. All employers must contribute to that pension arrangement and must monitor and keep records of their workforce’s membership of the scheme.

The laws came into effect for the UK’s largest businesses in 2012 and from April 2014, firms with a PAYE scheme size of between 249 and 160 needed to be ready. Firms with fewer staff members will be required to comply with the rules by a particular ‘staging date’ according to their size up until 2018.