By Phil Ellerby

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 in to 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 in to 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 within 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.

To discuss how the changes will affect your business, please get in touch call 0113 2189552 to arrange an informal discussion.

Whatever you do, don’t delay or put this off – it’s time to act now!