October 2015 will see the third anniversary of the start of Workplace Pensions. The latest commentary analysis from the Pensions Regulator indicates that progress has been good but that challenges remain. By March 2015 5.2 million workers have been successfully auto-enrolled. This has increased to 59% the number of employees who are actively members of pension schemes from 47% in 2012.
During that period the Pensions Regulator has made a number of interventions as shown below.
It should be remembered that this reflects the experience of employers with more than 50 employees. The vast majority of employers, those with less than 50 employees, are still to reach their Staging Date. As a result the number of penalties issued is likely to increase significantly.
While fixed penalty notice of £400 may not seem much, it is important to remember that these notices are issued after the Pension Regulator has asked employers to provide a considerable amount of information. So not only are employers losing money through fines they are also spending time unproductively answering these questions.
In addition to fixed penalties the Pensions Regulator can issue escalating penalties. These can be up to £500 per day for employers with between 5 and 49 employees.
The key to avoiding any problems when complying with the Workplace Pensions legislation is to start early. Make sure that you have a clear understanding of your responsibilities and when you need to take action. The successful implementation of a Workplace Pensions Scheme requires the co-ordination of the employer's HR function, payroll provider and pension provider. It is important that each party understands the nature of the pension scheme including the eligibility conditions (who can join and when), definition of pensionable earnings (do all of an individual's earnings count?) and contribution rates (how much is paid by the employer and the employee).
Another factor that can impact on the pension scheme is your pay period, is this weekly, monthly or something else. Non monthly pay periods may not coincide with your staging date so you will need to work out how to deal with this.