The Pension Regulator has increased its activity significantly in the last quarter to enforce Automatic Enrolment and is using pension providers to help them identify non-compliance. Pension providers will advise The Pension Regulator of schemes which have been set up which have no employees enrolled and pension schemes which have employees enrolled but have had no contributions paid. The Pension Regulator is able to identify employers who have not submitted a Declaration of Compliance and they will, no doubt, have a list of all employers so that they can identify those who have not informed them that they don't need a scheme.
It has always been made very clear to employers that the penalties for not complying with Auto Enrolment are significant and The Pension Regulator has shown that they will enforce these penalties if you ignore your duties. However they may give employers the opportunity to put things right but will require that they backdate contributions so that the employee does not lose out. The employee can choose whether to pay their own backdated contributions or not. In some cases The Pension Regulator may require the employer to pay both their own and the employees' backdated contributions.
More information about the process The Pension Regulator will follow if you do not comply with Automatic Enrolment can be found here.
The majority of employers will now have reached their Staging Date and should now have a pension scheme in place if they have eligible employees. 1st February 2018 will be the final Staging Date for employers registered prior to 1st October 2017. Employers registering for the first time after 1st October 2017 will need to set up a pension scheme immediately for any eligible employees as their Staging Date will occur on the date of registration.
Employers who have set up a scheme have an ongoing responsibility to ensure they carry out their auto enrolment duties which will include writing to their employees about the pension scheme, deducting contributions correctly from pay, advising the pension provider of the contributions, paying the contributions, enrolling employees when they become eligible and ensuring those who have opted out have their contributions refunded if they have opted out within the relevant time frame. And three years after the Staging Date employees who opted out of the pension scheme need to be re-enrolled again. You can find out more about your ongoing duties here.
In April 2018 pension contributions will increase. Employers will need to increase their contribution from 1% to 2% and employees will contribute 3%. Payroll software will need to be checked to ensure the correct deductions and contributions are being made.
Auto Enrolment is straightforward if you have time to manage it and there are no complexities in your payroll but if you are beginning to feel that it is just another task to add to your list try our Auto Enrolment Administration Service. We manage all the ongoing duties for you ensuring what needs doing is done on time. It is cost effective and really will give you peace of mind.