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30 Oct 2017

Quarter of firms miss auto-enrolment deadline

A record proportion of companies are setting up a workplace pension after their deadline has passed, according to research by Aviva.

In the third quarter of this year, 25% of businesses applying for an auto-enrolment pension scheme with Aviva did so after the ‘staging date´ set for them by The Pensions Regulator (TPR) and 56% of companies set their workplace pension at the last minute (in the month of staging or the prior month).

Under the Pensions Act 2008, every employer in the UK must put certain staff into a workplace pension and pay into it. Firms that miss their staging date risk being fined and may also have fewer options for a pension scheme because not all providers accept ‘late stagers´.

Figures from TPR show that in the second quarter of 2017 the regulator handed out almost 4,800 fines of £400 each to businesses that had failed to comply with their auto-enrolment obligations.

Auto-enrolment in its current form, with different deadlines for various businesses, will only continue into the early part of next year.

Since 1st October 2017, staging dates are no longer being given to new businesses. Instead, new companies now have auto-enrolment duties as soon as they hire their first employee and pay them a salary over £10,000.

And for all businesses with an auto-enrolment pension scheme, the minimum contributions will increase on 6 April 2018 and again on 6 April 2019.

Andy Beswick, managing director of SME Solutions at Aviva, commented: “Auto-enrolment has been a fantastic success so far with millions of people now saving for their retirement. But businesses and individuals need to be ready for the next phase.

“Start-ups, or sole traders beginning to take on staff, must put their pension scheme in place as soon as they hire their first employee. They will have to factor the contributions into their costs and be aware that the vast majority of people stay in the pension scheme.

“And both employees and employers also need to be aware that the level of compulsory contributions is increasing in April to 2% for employers, and 3% for employees.

“Higher contributions can help to contribute to a better standard of life in retirement and can be a useful tool in recruiting and retaining talented people.”

Copyright © M2 Bespoke 2017

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