Workplace Pensions: Pensions’ Regulator Warns Small and Micro-Employers To Plan Ahead To Avoid Enforcement Action.

Do you run a small or micro-business?

Does your company employ up to 30 members of staff? If you do then as accountants we think it’s only right to warn you that unless you act swiftly and auto-enrol onto one of the new workplace pension schemes before October, 2015, then you could face enforcement action.

Under new pension laws, UK employers are legally obliged to automatically enrol their staff into a workplace pension if they meet certain criteria. Non-compliance can lead to fines starting with a fixed penalty of £400 but escalating to daily fines set at a minimum of £50 per day. Civil penalties and court action can follow for persistent failures.

The new pension rules have been gradually phased in since 2012, with the larger firms going first.

At the present time medium-sized firms are staging. So far the Pensions’ Regulator has announced that around 4 million employees have been enrolled into a workplace pension as part of the auto-enrolment process.

However, that number could prove to be the tip of the iceberg, as from October, 2015, employers with a workforce of fewer than 30 employees will be obliged to start the staging process. Now October might sound like a world away, but the sooner you start to plan, the better. Why should you be taking action now? Well, simply because pensions’ providers believe employers will ideally need to plan at least a year in advance for the staging process to run smoothly. Under the new pension rules, 30,000 firms will have to comply by January, 2016, but that figure will rise dramatically in 2017 when 70,000 firms will need to comply in each of the months of January, February, and March. 

There is help available for employers, and the Pensions’ Regulator has compiled a checklist for employers to do as part of their planning process for auto enrolment. However, one of the key tasks facing employers will be deciding which pension scheme to use. If employers already have an existing pension scheme, then the choice will be easy. For employers without such a scheme however, the task will be more onerous.

What options are open to you? Well, you have 4 available pension scheme options open to you:

  • National Employment Savings Trust (NEST).
  • ‘Industry-wide’ schemes such as NOW Pensions.
  • Traditional providers, L&G, AVIVA, Scottish Widows etc.
  • Affinity group schemes.
  • National Employment Savings Trust (NEST).

NEST is an independently-run, not-for-profit pension scheme that is backed by the Government. It is designed for low-to-moderate earners, those whose employer didn’t previously offer a pension scheme and self-employed business owners themselves. It will be responsible for picking up schemes that are not placed elsewhere. At the moment, there is a cap on contribution levels and you can’t transfer savings from other schemes.

Traditional pension providers.

The more traditional providers have remained tight-lipped about what sort of workplace pensions they will be offering after October, 2015. However, what is known is that all will demand minimum numbers of employees, at least 10- sometimes 20- and then all will require that substantial contributions are made, (typically starting at around £100 per month per employee). With such rigid terms and conditions, these types of pensions are unlikely to be attractive to small and micro employers.

Affinity schemes.

The final option open to employers are affinity schemes. These schemes are a sort of hybrid option, bringing together a traditional pension provider, a firm of financial advisers and a portal to manage the scheme and report to the Pensions Regulator. The key features of Affinity Schemes are:

  • Help and support.
  • No minimum numbers and no minimum contributions.
  • Low charges.
  • No contribution charge – 100% allocation.
  • Flexibility.

If you are concerned about the new auto-enrolment qualifying scheme or have any other concerns relating to tax planning, business structures, book keeping, business planning, and growth, raising finance and VAT registration, then call Steven Glicher accountants on 0161 485 8007 or email

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