Rule-breaking SMEs face fines over new pension rules

THE number of small companies facing fines for breaching new rules linked to automatic pension enrolment is set to 'skyrocket', according to an industry analyst.

The number of small firms facing fines for breaching new pension rules is set to 'skyrocket', according to Catherine Pinkney, co-founder of Paycircle.

Under the Pensions Act 2008, which introduced automatic enrolment, every UK employer must put certain staff into a pension scheme and contribute towards it.

The Pensions Regulator has revealed that it issued 15,073 compliance notices to firms in connection with automatic enrolment over the last quarter, compared with just 3,392 in the previous quarter.

Sign up to our Business newsletter

Sign up to our Business newsletter

The Yorkshire Post understands that the regulator had expected the amount of compliance notices to rise. Growing numbers of small employers around Britain are reaching their deadlines – or “staging dates” - to comply with the new legislation.

Catherine Pinkney, the co-founder of the payroll and workplace pension platform, Paycircle, warned that many small firms could face fines if they don’t face up to their responsibilities.

Ms Pinkney said: “The rise in the number of fixed and escalating penalty notices handed out during the latest quarter is frankly staggering.

“An increase in the number of fines was always on the cards as the smallest businesses started to stage but these numbers are a real cause for concern.

“Between now and 2018 over a million small businesses are set to stage and, judging by this data, the number of fines is set to skyrocket.

“This latest data from the regulator is proof positive that too many small businesses are still in the dark about their workplace pension duties.

“For a multitude of reasons, not least considerable confusion around whose responsibility the workplace pension is — payroll provider, accountant, bookkeeper, adviser or employers themselves — many firms are burying their heads in the sand.

“Many of the smallest businesses still don’t know who to turn to for help. The irony is that for many, doing it themselves can be the quickest and cheapest option.

“The message is still not getting out to smaller business owners that they can set up a fully compliant workplace pension scheme themselves at no cost, and in some cases in as little as an hour.”

“The Pensions Regulator said that explanations given for non-compliance such as illness, being short-staffed, or confusion between employers and their advisers, were not “reasonable excuses”

Charles Counsell, the executive director of automatic enrolment at The Pensions Regulator, said: “We recognise that employers have unique circumstances and challenges, but the law is still the law. Employers who are struggling should contact us, we are here to help - do not wait for a fine.

“The vast majority of employers are successfully meeting their automatic enrolment duties and are doing the right thing for their staff. A small minority do leave plans too late but in most cases the nudge of a compliance notice is enough to get them back on track and avoid a fine.”

It’s four years this month since the first large employers reached their automatic enrolment “staging dates”. Pensions Minister Richard Harrington said: “Automatic enrolment is a great success. So far, more than 250,000 employers are helping more than 6.7 million people save into a workplace pension. 

“The duty is being extended to all UK employers and they must ensure they enrol their staff into a scheme by the deadline for their firm, it’s the law.”

Employers issued with a statutory notice will have a deadline to comply before further action is taken.

More information on statutory notices, including penalties, can be found at