View more on these topics

SMEs warned over auto-enrolment non-compliance bills

Small firms could be hit with bills totalling tens of thousands of pounds if they fail to comply with their auto-enrolment duties on time, Standard Life warns.

New analysis from the provider lays bare the potential cashflow nightmare facing SMEs if they are late setting up a compliant auto-enrolment scheme.

According to the insurer, a company with 250 employees that is three months late meeting its auto-enrolment duties will face a bill of £34,000 on average for backdated employer contributions.

A firm with 100 employees in the same situation would have to pay over £13,000 in contributions, while a firm with 50 employees would need to cough up almost £7,000.

Standard Life head of workplace strategy Jamie Jenkins warns these costs could spiral further if The Pensions Regulator intervenes and uses its powers to force small firms to pay outstanding employee contributions.

He says: “If an employer is beyond three months late, The Pensions Regulator can force them not only to pick up the contributions they have missed, but also the employees’ contributions.

“For a small employer that could cause a serious cashflow issue, particularly if the reason they have not complied in the first place is because they have run into financial difficulty. This could compound that problem. It is an issue we are worried about because we are still uncertain where employers due to stage this year are in terms of preparation.”

Jenkins warns those who miss their staging date and seek advice could also experience increased costs as they are treated as “distressed purchasers”. 

In addition, The Pensions Regulator has the power to fine employers if it believes they are wilfully not complying with their legal duties. 

Jenkins says: “Anecdotally, employers who approach advisers late in the day to help them with auto-enrolment are being charged a lot more.

“That is understandable because advisers have limited capacity and to get a firm compliant in a short timeframe costs time and money. We have seen examples of fixed auto-enrolment fees increasing from £5,000 to £20,000 because the employer has become a distressed purchaser.”

Last month, Money Marketing reported concerns from a number of providers that auto-enrolment was at risk of “falling over” because up to a third of employers who should have set up compliant schemes in April and May have failed to do so.

However, The Pensions Regulator sought to allay these fears, saying predictions of mass non-compliance were “unfounded”.

p14

Adviser view

Rob-Reid-MM-Peach-700.jpg

Robert Reid, managing director, Syndaxi Chartered Financial Planners

Bills can mount up quickly for firms which do not prepare for auto-enrolment ahead of their staging date. The costs of setting up a pension scheme will pale into insignif-icance compared to the cost of not doing this properly. 

Recommended

Tolley-Steve-peach.jpg
1

Osborne must be bold on pensions guidance

There’s no two ways about it, Chancellor George Osborne’s Budget pensions bombshell was a bold move. It will revolutionise pensions, giving people far more control over what they do with their money as they approach retirement. But it is not a risk free move. Those on the other side of the freedom/paternalism line the Chancellor […]

Business-Handshake-Meeting-Deal-Low-Angular-700x450.jpg

Nucleus board member Bruce Wilson steps down

Nucleus director Bruce Wilson has stepped down from the board. Wilson has been a director since the platform launched and has been non-executive director since 2011. He is also a non-executive director at Helm Godfrey, a shareholder in the Edinburgh-based platform.  Nucleus says a replacement will be confirmed “in due course”. Nucleus chief executive David […]

Meeting-Business-Finance-Boardroom-700.jpg

Legg Mason unveils Brandywine global credit fund

Legg Mason Global Asset Management is set to launch a global credit fund for one of its affiliates, subject to the fund’s registration in the UK. The Legg Mason Brandywine Global Credit Opportunities fund will be managed by Brandywine’s global credit team.  It is a Dublin-domiciled version of Brandywine’s US Global Alternative Credit fund. The new […]

DWP-Department-Work-Pensions-700x450.jpg

Pensions Policy Institute: Self-employed at risk under auto-enrolment

Self-employed workers are at risk of falling short in retirement unless more is done to encourage pension uptake, the Pensions Policy Institute warns. Under auto-enrolment, self-employed individuals are not compelled to take out a workplace pension policy, while the majority of the rest of the population will be automatically entered into a scheme. A PPI […]

Introducing Trevor Greetham

Ryan Medlock, Investment Proposition Manager, Royal London Royal London Asset Management’s (RLAM) new head of multi-asset is officially up and running. I want to look at what expertise Trevor brings to the table and how this affects the Governed Portfolios (GPs) and Governed Retirement Income Portfolios (GRIPs). Trevor Greetham joined RLAM in April 2015 from […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com