Small business owners have been warned that failure to comply with Automatic Enrolment legislation could have a catastrophic effect on their cashflow.
The research from Standard Life, has highlighted the cost to small businesses of not complying with the legislation, which could run into tens of thousands of pounds.
Potential costs include:
- A fixed penalty notice for non-compliance of up to £400
- An escalating penalty notice, again for non-compliance, of between £50 and £10,000 per day, depending on the number of employees you have
- A civil penalty notice, where contributions are not paid, of up to £5,000 for individuals and £50,000 for companies
- A bill the missing contributions backdated to the Staging Date
Standard Life has calculated that an employer with 100 staff would face a bill of £13,000 in fines, penalties and backdated contributions if they are just three months late.
A firm with 50 employees would get a bill for £7,000.
For many firms, where cash is still tight, these costs could be the difference between continuing to trade and going bust. Especially, as the Pensions Regulator could force a firm to pay their employee’s contributions, if the Staging Date is missed by more than three months.
Commenting on the news, Jamie Jenkins, Head of Workplace Strategy at Standard Life said: “If an employer is beyond three months late, The Pensions Regulator can force them not only to pick up the contributions they have missed but also the employees’ contributions.”
“For a small employer that could cause a serious cashflow issue, particularly if the reason they have not complied in the first place is because they have run into financial difficulty. This could compound that problem.” (Source: Money Marketing)
How can you avoid missing your Staging Date?
Missing your Staging Date will not only lead to fines and penalties, but could also increase the cost of implementing a scheme in the first place. Jamie Jenkins again: “Anecdotally, employers who approach advisers late in the day to help them with auto-enrolment are being charged a lot more.”
“We have seen examples of fixed Auto Enrolment fees increasing from £5,000 to £20,000 because the employer has become a distressed purchaser.”
On 1st August firms with 61 employees will have to comply with the new rules and any firm with between 50 and 60 workers will need to comply by 1st April 2015.
So how can you avoid missing your Staging Date?
- Don’t underestimate the amount of work involved
- Remember this isn’t going away, you need to commit time to complying with the rules
- Plan carefully but don’t delay taking vital decisions
- Remember that it’s never too late
Read more hints and tips to help you avoid missing your Staging Date by clicking here.
How can Investment Sense help?
We know many employers are concerned about their Automatic Enrolment obligations and we’re here to help.
We’ve developed a four stage process to ensure your business is compliant by your staging date and sticks to the rules in the months and years to come.
If you:
- Would like to know your staging date
- Have a question about Automatic Enrolment
- Would like to know how you can comply with the new rules
Then get in touch today, to put it bluntly, this problem isn’t going away and your staging date is only getting closer.
We’re here to help, call us on 0115 933 8433 or email info@investmentsense.co.uk
