According to the auto-enrolment (AE) legislation, eligible employees have to be enrolled in a workplace pension scheme.
However, according to research published by The Resolution Foundation, 3% of those employees have fallen through the cracks… not because they’ve opted out, but because they’re not enrolled the way they should be.
3% sounds like a small number, right? A total of 3% translates to millions of individuals that are losing vital opportunities to save for retirement. Unknowingly, a large number of employers are often non-compliant with their legal obligations. This is punishable by law and can often lead to substantial fines.
Pension enrolment issues surround part-time workers and sectors with high turnover
Workplace pension compliance is surprisingly complex for companies with a stable workforce as the processes, rules and regulations can be difficult to precisely follow.
Understandably, businesses with part-time staff and frequent payroll changes, are the most likely to be experiencing errors with auto-enrolment. Due to consistent shifts within the workforce, as we stated earlier, it’s simply too easy to fall through the cracks.
The Resolution Foundation calculated that part-time and temporary workers are 2 times more likely to be missing out on workplace pensions, compared with the likes of full-time colleagues.
Hospitality, agriculture and admin support – which experience high turnover – have high non-enrollment and underpayment rates. Nonetheless, these aren’t the only suspects guilty of breaking the rules. Non-compliance with pension regulations spans across all industries and sectors, and for businesses, it’s becoming increasingly important to stay on top of workplace pension schemes.
The pension regulator is stepping up enforcement
The Pensions Regulator has gotten tougher on non-compliance – and finds breaches in 74% of spot checks. In 2018-2019, 40% of its enforcement activity arose from non-payment or underpayment of contributions. Regulators are stepping up their efforts in enforcing pension rules, so it’s time your business does too.
Companies can’t afford to be complacent about auto-enrolment compliance
It’s simple, businesses in today’s world cannot afford to be complacent about auto-enrolment compliance. There are financial and reputational repercussions from being taken to task by TPR.
Depending on the number of workers involved in the compliance breach; you can be liable for escalating penalties of between £50 and £10,000 per day. Moreover, the company name goes on public non-compliance lists. This often has negative snowball effects upon the reputation of the business for staff, potential employees and within the general public eye.
To avoid this situation, we recommend having a proactive auto-enrolment compliance audit, so you identify any problems quickly. Husky has the right technology that makes this process easy, picking up issues that payroll software modules easily miss.
With the help of Husky, you have a straightforward and comprehensive list of what needs addressing within the pension scheme of your business. As a result, you gain complete peace of mind that the business is compliant and that the staff are getting the correct benefits.
If you’re looking to learn more about workplace pension compliance and how you can help save more money for your business and the retirement of staff, contact a friendly member of our team today. They will be happy to guide you through a number of ways you can take control of your workplace pension.
At Husky Finance, we offer the future of pension control.