5 shocking reasons why SME owners must know Auto Enrolment Pension rules!
Are you completely up to date on how pension enrolment can impact your business?
The latest legislation surrounding Auto Enrolment Pensions may seem like a minefield, but it’s something ALL business owners HAVE to do – whether they understand it or not.
Brought in as part of the Pensions Act 2008, every UK employer must offer its staff the chance to pay into a Work Place Pension scheme. If the employee chooses to do so, the employer MUST also make financial contributions towards it.
Although there are various options to choose from, essentially there are 5 choices
Use the default NEST pension scheme
This tracker-based fund is passively managed and is ‘pre-programmed to follow the stock market.
Choose a master trust pension
This option sees a large number of employers invest in a single trust which is ring-fenced and actively managed.
Opt for a company-specific pension scheme provided by a pension company
Administered by an Independent Financial Adviser (IFA) for a performance-related fee, this option lets your fund be actively managed and reviewed regularly to maximize the returns.
The Do it Yourself option
An employee can opt not to pay into any of these schemes and instead sets up their own personal pension.
Choose a Special Exemption
If your company is a director-only employer you may qualify for a Special Exemption but this has to be reviewed every three years.
Five reasons you MUST comply with new pension regulations
Any business owner who is non-compliant with the new regulations could face severe penalties:
- A fixed penalty notice of £400 for missing your staging date
- Fines of up to £500 per employee for pension scheme errors
- Escalating fines ranging from £50 to £10,000 per day – depending on how many staff you have
- If contributions are not paid into a pension by an employer, they could be fined up to £5,000 per individual or £50,000 per business
- In extreme circumstances, a business owner who remains non-compliant could face up to two years in prison
To avoid incurring huge fines from the Government, businesses must make sure they comply with certain regulations before certain timescales – and that’s where we come in.
How we can help set up an Auto Enrolment Pension scheme
Here at Northern Accountants, we are helping our clients make the right choice for their business and staff.
If you’re worried by these fines or you’d like to find out more about your obligations as an employer, take a look at our Auto Enrolment Guide to see how we can help you through the entire process.
Whatever you do, don’t delay or put this off – it’s time to act now!
