“Disturbing” pattern of companies falling foul of auto-enrolment rules

LARGE employers have already passed the deadline for setting up workplace pension plans for employees, but they had the benefit of HR and payroll teams, as well as many having schemes already in place.

John Copsey of Informed Financial Planning in Hull has said: “A disturbing pattern has started to emerge in terms of the increasing number of enforcement notices. “

According to the pensions regulator’s latest compliance and enforcement quarterly bulletin, a total of 1,139 compliance notices have been issued to UK employers along with 166 fixed penalty notices where they have fallen foul of the rules.

In January 2015, firms with fewer than 50 employees reached their “staging date.”

Mr Copsey predicts that these compliance figures will worsen over the coming months “as the smaller employers are less equipped to deal with the complexities auto-enrolment presents.

“For many this will be seen as an “obey the rules”, tick box exercise but let’s not forget ultimately this is about building a retirement fund for us all.”

“My experience is that employers are challenged by the complexities of the legislation and struggle to find practical assistance in setting up their workplace scheme. They have to first find an appropriate pension provider, set up payroll to make the pension deductions, work out how to extract the required data and then load this into the pension scheme’s website. In all there are some 70 steps an employer needs to go through, no wonder this is a daunting task!

“One of my clients, for example, is a holding company which own six subsidiaries all in similar business activities, but there are seven separate staging dates.

“The HR department wants to ensure all employees will enjoy an employer pension contribution at the same time so they are currently trying to organise simultaneous compliance rather than seven times over the next three years.

“The contract of employment made reference to an old pension scheme which, it turns out, cannot be converted to an auto-enrolment pension scheme, so they have had to revisit the terms of employment for all staff.

“Another client of mine had to buy a whole new payroll package as its current software just couldn’t cope with the requirements of automatic enrolment – an unintended consequence I am sure of the new pension regulations, and again this takes time and money!

“From my experience employers need to plan well ahead of their staging date, ideally at least six months. I have found working with local companies that this approach works, otherwise they risk making mistakes and not having time for the day job.”

Informed Financial Planning was established in 2004, and has offices in Barnsley, Hull and Leeds.