Auto-enrolment? No! Auto-bankruptcy!
The Government is really serious about auto-enrolment happening and you can tell because they are willing to make companies go bankrupt rather than avoid doing it! Well okay, that isn’t their stated intention, but look at the fines for not doing it. If you thought H&S fines of £20K for infringements were bad, think again!
If you don’t do it right (or more to the point your accountant doesn’t) then it is an automatic fine for you of £400.
On top of that is an on-going fine until it is sorted of either £50/employee/day (1-4 employees) or £500/employee/day (5-49 employees). The fines per day if you have more employees than that are horrendous!
So if you have 10 employees, and you do it wrong, it is a “one off” fine of £400, and then £5000 A DAY until it is rectified. How long could you stay in business if you had to pay those sort of fines (hence the title of this article)?!
There is another fine as well, of course.
Some employees I have spoken to have said that they are going to opt out. Not sure why, somehow they think they don’t need to pay into the system but that the system should still take care of them when they have no money (these are not self-sufficient millionaires that I am talking to here!). However, if you, the employer, say to them “Would you like to opt out” or offer them a form without them specifically asking for it themselves, then you will have to pay £1400 per employee who you say it to!
So I think that all us employers are going to try our darndest to get this right and keep our money rather than give it to the government. And the best way to do this is to get the auto-enrolment pension set up. NEST may not be your best option, you can use other pensions, but the important point is that it takes at least 6 months to get this in place. And if you leave it too late, then the fines of £5000/day will apply until it is in place. Yikes! So please, please, please talk to your IFA now (NOT the bank!) about your options.
We use and recommend Simon Venables at Grosvenor Consultancy Ltd for all our pension “stuff”. Give him a call or send him an email firstname.lastname@example.org on 01793 433965 quoting Gap HR. He’ll be glad to help you out!