Auto enrolment: a cautionary tale

If you think auto enrolment is something you can afford to ignore, think again. One company received a hefty £40,000 fine for failing to comply with auto enrolment duties. Just think about the great employee benefits you could buy with that amount!

It started with an initial Fixed Penalty Notice (FPN) of £400 for footwear firm Johnsons Shoes Company, when the business failed to complete their declaration of auto enrolment compliance.

Many a business may feel that ‘pressure of work’ is a valid excuse for missing a deadline, but The Pensions Regulator (TPR) didn’t agree.

The FPN was issued, but the pain didn’t stop there. Despite being stung once, Johnsons failed to comply and were given another deadline – after which they would begin to accrue a fine of £2,500 per day (based on the number of workers in their PAYE scheme).

Even this didn’t work immediately, despite ongoing support and advice from TPR. By the time satisfactory evidence of compliance had been supplied, the fine-o-meter had racked up an eye-watering £40,000.

Johnsons challenged the fine unsuccessfully. The debt was pursued to its conclusion though the courts, which added an additional £2,000 of legal fees to Johnsons’ final bill.

All this goes to show that auto enrolment compliance may be challenging and time-consuming commitment for businesses, but it’s one that simply can’t be ignored.

What exactly does auto enrolment compliance mean?

• Enrolling all eligible staff into a pension scheme from the staging date.
• Paying contributions in to the scheme.
• Writing to all staff explaining how automatic enrolment affects them.
• Administering the scheme on an ongoing basis.

It helps to have experts to call on who can support you with all the paperwork and day-to-day tasks involved. If you’re auto enrolling for the first time (or if you want to enhance your current offering), don’t follow in the footsteps (sorry!) of Johnsons’ Shoes – let our pensions specialists advise.