Auto Enrolment = Workplace Pension

Auto Enrolment = Workplace Pension

As we have been meeting with small and micro employers over Bristol and the South West my colleagues and I find that employers are unaware of the extra work and responsibilities Auto Enrolment brings.  For some employers they don’t realise that Auto Enrolment is the main part of workplace pensions being  the assessment of the employees.  All the TV adverts ‘workplace pensions – we’re in’ and general advertising seems to be directed at the employees and it is not clear to some that the workplace pension is the end product of Auto Enrolment.

What are the consequences of not being ready?

Research by The Pensions Regulator shows that “20% of small and micro employers whose duties come into effect in the coming months do not know the exact date their duties start. Employers who are not clear about this, risk failing to comply on time and are sometimes unaware they will have to pay the pensions contributions missing because of the delay”. This will be backdated to the company staging date (the date the company is legally required to Automatically Enrol all eligible employees) and in some circumstances the employer will be required to pay the employees contributions as well as their own.

Fines issued so far…

Every three months The Pensions Regulator publishes a quarterly compliance and enforcement bulletin that shows the number of fines they have issued.
Between April and June 2015 the regulator has used its powers and issued:

  •   119 compliance notices
  •   50 unpaid contributions notices
  •   68 fixed penalty notices
  •   0 escalating penalty notices

Fixed Penalty Notices

Failure to comply with a statutory notice leads to a fixed penalty notice being sent out with a fixed fine of £400. Failure to pay the fine and comply could lead to wilful noncompliance which could lead to prosecution.  68 fixed penalty notices were issued last quarter amounting to £27,200. To date, £132,800 has been collected from fixed penalty notices.

Escalating Penalty Notices

Since the start of Auto Enrolment only 4 escalating penalty notices have been issued. Taking a look at the fines below you can see why employers are hurrying to comply after they receive a fixed penalty notice, as a daily fine of £10,000 is too much for even the biggest companies to lose.

Number of persons

Prescribed daily rate (£)
1-4 50
5-49 500
50-249 2,500
250-499 5,000
500 or more



Doesn’t look too bad!?

Don’t be fooled by the small number of fines that have been administered between January 2012 and June 2015.

Now it is the turn of small and micro businesses to stage and in a survey carried out at The Friends of Auto Enrolment Conference in September 82% of industry leaders believe there will wide spread non-compliance for auto enrolment as company’s reach their staging dates in 2016/17.  To emphasise these results this quarter’s Pension Regulators bulletin stated that 20% of companies staging between now and November 2015 have no plans in place for Auto Enrolment and therefore could be facing fines.

Why should you plan early?

As we have stated before, this year there are 45,000-50,000 companies staging, next year there will be 51,000 companies per month staging.  Pension providers will be inundated and will have to start turning companies away leaving the employer with limited options and a very basic pension scheme such as NEST.  NEST is the Government scheme that has to accept any employer. Therefore, they like others will be inundated, putting a strain on the level of support and service you might receive.  It is also important to note that a pension company asks for 3-6 months to set up a scheme.

Employers that are staging between now and 1st November 2015 who haven’t prepared for their Auto Enrolment staging date are going to find it very difficult to find a pension scheme and set everything up in time.

You don’t have to wait

The alternative to leaving everything to the last minute is to bring your staging date forward! This will bring your costs forward but may help you to get the best benefits for your employees and reduce the risk of fines later.

As an employer it is your responsibility to provide your employees with a pension scheme.  By 2018 all companies will provide a pension scheme therefore by selecting a good quality scheme you will be able to differentiate your company from others.  This will help with employee retention and attracting the best calibre of recruits.


The clock is ticking, your staging date may seem along way away but the earlier you prepare the better pension scheme you will be able to select, and the risk of receiving any fines will be reduced.
If you are an employer of 5 staff or under then you will still want to prepare early as closer to your staging date NEST, and the other two small providers Now:Pension and People’s Pension, will be just as inundated as the big pension providers and will struggle to offer the support and service you will need.

Remember the pension scheme is the end result no matter what size your workforce is there will be additional administration and software costs.
Payroll Compliance Ltd can reduce the Auto Enrolment burden, please give us a call on 01275 858001 and speak to either myself Rachel, or Stephanie.  Alternatively email us at and we will let you know how we can help.