Act on new staff pension rules or be fined!

January 18, 2016 by Andy Crow

Act on new staff pension rules or be fined!

The Pensions Regulator is calling on small businesses to act on new staff pension rules or risk hefty fines. These may sound like shock tactics but businesses have had a great deal of warning.

A recent survey by the Federation of Small Businesses (FSB) found that 45% of those asked were confused about the rules and their responsibilities. On top of this some 25% of those surveyed also feared that their business might not be able to cope with the extra cost.

More than half a million UK employers with fewer than 30 employees will be required to enrol eligible staff into a pension this year. All employers have already been given an automatic enrolment date, by which they must make sure workers are signed up.

However many SMEs won’t give themselves enough time and as a result, could be subject to penalties, the regulator warned. These include fixed penalties of £400, daily fines of £50 to £500, and even prosecution.

Put simply, if you have people working for you who are between the age of 22 and the State Pension age and earn over £10,000 per a year then you have to set up a scheme for your employees.

The contributions come from three places.

1. The employer
2. The employee will themselves pay from deductions you make from their pay.
3. The government will contribute via tax relief.

There are number of stages that you must go through to begin the process which could take as long as 12 month to sort correctly.

Things that you should consider now are:-

1. Find out your staging date. 
2. Decide if you need some support. 
3. Talk to your employees about the pension scheme.

As a business owner you may well not have the resources or the time you need to deal with these new and additional responsibilities. As a result you may find it more challenging to incorporate these new duties into your day to day business than you think.

So make sure you know exactly what you need to do and by when.

If you’re not sure of your staging date, you can find this out on The Pensions Regulator website. If however you would like to speak to an expert, Chorus Business Advisers can put you in touch with specialists that will help you through the process.  Please call 0845 867 1263 or email [email protected]  for more info.