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Auto-enrolment payroll services

Small businesses fined for not complying with auto-enrolment payroll services

When the government introduced auto-enrolment in October 2012, the intention was that all businesses would have their staff enrolled by April 2017 – and any new businesses by February 2018. So auto-enrolment into Workplace Pension schemes has finished its rollout, and applies to businesses of every size. Without exception.

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But recently, a freedom of information request made to the Pensions Regulator discovered that the number of employers encouraging employees to opt-out of their pensions - so that they could avoid making their employer contributions - had risen by 68%.

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This is even more worrying because the government predicted that as many as 28% of employees might opt-out of auto-enrolment. But in fact, even low income households have adapted their budgets to ensure they can contribute towards their pensions.

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Today, auto-enrolment opt-out rates are running at less than 10%.

Justice

The number of pension pots being filled has increased by 50% since the introduction of auto-enrolment, and the majority of these are from small businesses in the private sector. Even the increase from 1% employee contributions to 3% didn’t see many employees opting out.

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The Department for Work and Pensions reported that employees saved an extra £6.9 billion into workplace pensions in 2017-18 tax year. But not everything is rosy. Back in 2012, pension contributions were at a record high of 9.7% of the average UK salary. In 2017, this dropped to just 3.4%, with 1.3% coming from employees and 2.1% from employers.

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To make matters even more complicated, especially for small businesses, this changed again in April 2018 with minimum contributions now at 5%. This will rise again in April 2019 to 8%. Yet whilst all the evidence is pointing towards employees adapting rather well to auto-enrolment, there have been recent reports that small businesses are still not being very quick to comply and many are failing to meet their obligations under auto-enrolment. The Pensions Regulator has been steadily auditing small businesses and can quickly spot those not complying, resulting in fines and penalties from £400 to £10,000 which obviously, many struggle to pay. In a recent update, it was reported that almost 28,000 compliance notices were issued to small businesses between April-June 2018.

There is still work to be done on auto-enrolment and the onus remains on the small business to ensure they are running a legitimate and properly administered pension scheme with regular and accurate contributions for all staff.

Has your small business got auto-enrolment covered? If you decide to work with Proto Payroll services, we’ll guarantee your business will be auto-enrolment compliant.

Payroll services allow you the freedom to focus on growing your business saving you time and energy. The best way forward is to find one which offers a fully managed payroll service for start ups and small businesses so you have complete piece of mind.

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We offer online payroll services throughout the UK and have the team, the time and the expertise to help you at Proto Payroll. For an informal chat, please email tom.hornbuckle@protopayroll.co.uk or complete a free quote using our payroll calculator on our website.

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