The UK’s small companies face being slapped with around £25 million of fines for missing the government’s auto-enrolment deadline, a study finds.
Between now and 2018, some 1.8 million employers will begin to ‘stage’ (be required to set up a workplace pension), but based on fines handed out by The Pensions Regular (TPR) to date, a large number of small and micro-businesses will miss their target and face a £400 fixed penalty.
According to TPR data, of the 63,700 companies that have staged since July 2012, more than 95 per cent have complied with the law. The rest have been handed fixed or escalating penalties.
If the current rate of fines being handed out continues, then between now and 2018, an estimated 63,000 small and micro UK employers, representing roughly 3.5 per cent of those due to auto-enrol, will receive fixed non-compliance fines totalling over £25 million.
This fines warning follows recent TPR findings showing that 40 per cent of micro-employers (those with one and four staff) will turn to external advisers for advice, spending around £317 million between now and 2018.
Coupled with the estimated £25 million of fines, the cost for small UK firms to comply could be as much as £350 million.
Catherine Pinkney, co-founder of Paycircle, which commissioned the study says, ‘Not only will many of the UK’s smallest businesses face significant set-up costs for their workplace pensions, but a large number, according to the latest data from TPR, will also receive a fixed penalty fine.
‘In reality, the percentage of smaller employers that incur a penalty is likely to be higher than the rate to date as smaller companies have less people and time for administration duties. Now is the time for small firms to be proactive about auto-enrolment, or face fines that can rapidly escalate.’