Businesses fined for pension auto-enrolment errors rises 144 percent 

EMW says businesses were fined £42m in 2017/18 for pension auto enrolment errors, up more than threefold from £12.6m in 2016/17. EMW explains that the rise in the number of fines is partly due to the expansion of the auto enrolment pension regime to cover smaller businesses (fewer than 50 employees).
pension strategy

The number of businesses fined by the Pensions Regulator for pension auto-enrolment errors has risen 144 percent to 35,810 in 2017/18, up from 14,650 in 2016/17* says EMW the commercial law firm. Contributor Jon Taylor, Principal – EMW.

EMW says businesses were fined £42m in 2017/18 for pension auto enrolment errors, up more than threefold from £12.6m in 2016/17. EMW explains that the rise in the number of fines is partly due to the expansion of the auto enrolment pension regime to cover smaller businesses (fewer than 50 employees). Prior to the regime changes, only large and medium sized businesses were required to auto enrol staff into a pension scheme.

EMW says that the complexity of auto enrolment schemes means that smaller businesses without in-house HR functions are at risk of making errors when attempting to auto-enrol staff. The rise in fines does not necessarily mean that employers are deliberately avoiding auto enrolling staff.

One common problem for SMEs is poor record-keeping. While larger firms will often use specialist payroll software to calculate what pension payments to make on behalf of staff, or pay an accountant for the service, smaller businesses may not have the resources to accurately calculate an employees’ contribution to enrolment schemes.

Smaller businesses can also be fined for something as simple as not providing regular updates to the Pensions Regulator. Failure to provide regular salary updates and data submissions on employees is regarded by the Pensions Regulator as non-compliance, and will result in substantial fines.

Auto enrolment errors can become increasingly costly for employers if they go unreported for an extended period of time. The regulator can make an unscheduled check on an employer, and if they uncover longstanding issues, can levy much larger fines.

Jon Taylor, Principal at EMW, comments: “The sharp rise in the number of fines by suggests that SME’s are having real problems keeping on top of complex auto-enrolment schemes. While larger businesses will have the necessary infrastructure and expertise to correctly auto enrol workers, the same does not always apply to smaller businesses.”

“Considering the huge number of businesses now being caught by fines perhaps the Pensions Regulator needs to consider moderating the scale of the fees especially for SMEs.”


Receive more HR related news and content with our monthly Enewsletter (Ebrief)

Read more

Latest News

Read More

Breaking the stigma: How employers can support menopause in the workplace

5 November 2024

Newsletter

Receive the latest HR news and strategic content

Please note, as per the GDPR Legislation, we need to ensure you are ‘Opted In’ to receive updates from ‘theHRDIRECTOR’. We will NEVER sell, rent, share or give away your data to third parties. We only use it to send information about our products and updates within the HR space To see our Privacy Policy – click here

Latest HR Jobs

University Of The Arts LondonSalary: From £43,512 per annum

Imperial College London – President’s TeamSalary: £56,652 to £68,005 per annum

University of East Anglia – People and Culture Division – Human Resources ServicesSalary: £30,505 per annum, dependent on skills and experience, with an annual increment

University of Leeds – Equality and Inclusion UnitSalary: Competitive, based on expertise and experience

Read the latest digital issue of theHRDIRECTOR for FREE

Read the latest digital issue of theHRDIRECTOR for FREE