Pensions auto-enrolment for the smallest of SMEs is still in its infancy, but it seems that already some businesses are falling foul of the rules. According to law firm Clyde and Co, whistleblowing to the Pensions Regulator increased by almost a third over the last year, while enforcement actions more than quadrupled.
According to Clyde and Co, in the 2015/16 tax year, TPR received 2,545 tip-offs about rules breaches, representing an increase of 29 per cent on the previous year.
What lies behind the startling figures? Clyde & Co. head of pensions Mark Howard says he believes that for many SMEs, it’s a resourcing issue. “SMEs yet to face their enrolment deadlines are not going to have the support of HR departments to help them deal with the administrative headache of enrolling their employees into a pension scheme.”
“The regulator has put out a lot of guidance aimed at SMEs, but even so, it’s not surprising we are seeing the number of whistleblowing and enforcement actions increase as the number of employers subject to auto-enrolment grows substantially.”
The consequences for breaching auto enrolment rules are clear, and significant: In April, TPR reminded firms with 1-4 employees that if they failed to act on 28-day escalating penalty notices, they could be fined £50 a day. The penalty rises to £500 a day for those with five to 49 employees.