Sharp rise in pension auto-enrolment fines
The last financial year has seen a sharp rise in the number of businesses fined by the Pensions Regulator for pension auto-enrolment errors, a freedom of information request has shown.
The number of fines in 2017-18 was 35,810, up from 14,650 in 2016-17, commercial law firm EMW has found.
Fines totalled £42m in 2017-18 for auto-enrolment errors, up from £12.6m the previous year.
The startling number of fines was put down to the expansion of the auto-enrolment pension regime to cover smaller businesses of fewer than 50 employees. Until 2017, only large and medium-sized businesses were required to auto-enrol staff into a pension scheme.
Under the Pensions Act 2008, every employer in the UK must put their qualifying employees into a pension scheme and, where appropriate, pay contributions – a law that has been gradually rolled out over the past 10 years.
From 6 April 2018, employers had to double their pension contributions from 1% to 2% of an employee’s salary and employees had to put in 3%, up from 1%.
There are about 1.1 million employers in the UK with fewer than 10 employees. Since April 2017 they have been been required to auto-enrol staff earning £10,000 or more in a workplace pension scheme.
EMW said that the complexity of auto-enrolment schemes meant that smaller businesses without in-house HR functions were at risk of making errors when attempting to auto-enrol staff. The rise in fines did not necessarily mean that employers were deliberately avoiding auto-enrolling staff, the firm argued.