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13 March 2017

Businesses are risking credit blacklist by missing workplace pensions deadline

By Dave Stallon, Commercial Director of FSB 

Thousands of smaller and micro businesses could be risking their credit records by failing to meet their statutory deadline dates for enrolling staff onto workplace pension schemes.

Businesses that have ignored penalty notices issued to them for not meeting their staging date, are now being issued with County Court Judgements (CCJs). They will then have 30 days within which to pay the accumulated fines. If they don’t, the CCJ will be entered on their credit record, remaining there for six years, and seriously affecting their ability to borrow money in the future.

For many managing directors and business owners, auto-enrolment is seen as yet another regulatory burden; Despite a willingness to do the right thing for their employees, many smaller businesses don’t have the resources in-house to set up a compliant scheme and enrol all their staff in time for their staging date.

The latest government figures show that many smaller businesses are struggling to auto-enrol staff onto a compliant workplace pension by their allocated staging date. In the last three months of 2016, more than 10,000 fines and other sanctions were issued to smaller businesses whose ‘staging date’, hadn’t been met. The sanctions for failing to do so are weighty.

As well as issuing penalty fine notices, the pensions regulator has powers to demand information or issue a warrant to search and inspect premises. To date, no appeal against a penalty notice has been won at Tribunal; No business having been able to demonstrate that they had a reasonable excuse for failing to comply.

Smaller businesses face specific operational pressures. Many have complex employee contract arrangements - particularly in certain sectors, such as food and drink - with a high proportion of temporary or part-time workers, or seasonal staff, for example.  

Auto-enrolment is proving to be a particularly thorny matter for many. Anecdotal evidence suggests that some businesses may be paying a high fee to a pensions company to sort the matter out for them.

I’m aware of instances where business owners have been quoted upwards of £12,000 by a company to set up a scheme for around 100 staff, with additional annual fees of around £3,000.  Businesses shouldn’t have to pay these types of costs. It’s highly possible to have a compliant scheme set up for a business employing 115 staff, quickly and easily for not much over £1,000 by a professional provider, with no annual consultancy fees thereafter.

FSB has created a free online resource with webinars, information, staging date tracker and expert advice about auto-enrolment and how to set up a compliant workplace quickly and easily.

Dave Stallon

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