Auto Enrolment Pensions Update: Spring Cleaning Before Spring?
With all the inevitability of a car crash in slow motion Brexit will arrive upon us at the end of March this year. For almost all UK businesses the impact of any final Brexit deal (assuming one is reached) will be a main focus for their organisation for the rest of 2019, potentially impacting on markets, materials, and supply lines.
What better time then, six days after Brexit, to have this year’s annual auto-enrolment pensions increase, which will see contribution levels increased again, up to 5% for employees and 3% for employers?
Increasing number of employers fined
For many employers there will be cold comfort in this latest increase as they will be part of the growing number of UK PLC businesses which have become subject to fines for auto-enrolment errors. Recent news shows there has been 144% rise in the number of businesses fined for auto-enrolment errors, with nearly 36,000 businesses fined in 2017/18 alone. Revenues obtained by the Pensions Regulator as a result of the fines have increased in the last full year from £12.6 million to £42 million; and when you include the number of businesses who have been served enforcement notices (requiring them to make changes to ensure they are compliant) almost 15% of UK PLC has fallen foul of the Regulations.
What to do now
The three month period before the contribution rate increases at the beginning of April 2019, would be an ideal period for many employers to review their existing auto-enrolment processes, ahead of the inevitable distraction of running a business post-Brexit.
We already see a number of recurring reasons for fines and failures these include:
- Failure to complete the online registration forms with the Pensions Regulator
- Failure to respond to the Regulator when it requests information
- Failure to correctly deal (either manually or through payroll systems) with fluctuating pay -covering everything from annual salary increases to additional overtime – and leading to workers who should be being auto-enrolled not being, and employers being in breach of their obligations
- Failure to implement auto-enrolment correctly in relation to TUPE transfers
- Failure to hold the correct records.
With 2019 also seeing increased spot checks, both geographically and in certain sectors, by the Pensions Regulator, along with a significant reduction from the previous 80+Master Trusts down to just a hand full of Master Trusts, now would be a great time for all businesses to undertake a risk assessment ensuring your processes, record keeping and communications are compliant and identifying where any efficiencies may be improved, both in terms of process, and your scheme’s performance.
Don’t let Brexit distract you from your auto-enrolment duties and risk a fine, get in touch with our pensions team.
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