To comply, or not to comply…it’s not even a pensions’ question!
Compliance is certainly a warm and cuddly word that contains a wealth of potentially terrifying consequences, while highlighting that employers will face enforcement issues on the Pensions Auto Enrolment front.
There was a time, when qualifying for a company pension scheme was one of working life’s little package benefits. However, as a number of people reaching pensionable age in recent times have discovered, what might have been promised could be somewhat impossible to quantify and even more unfeasible to touch. Something had to change and it did, in the form of Pensions Auto Enrolment, or PAE.
Rather than it being a useful marketing ploy, to gather up the best workforce and promise a future that might never be forthcoming, the laws were changed and ALL employers now find themselves on a compliance track. However, there is no real non-compliance option, apart from receiving a series of compliance letters, followed by a run of increasing fines. The employer’s responsibility is outlined in the Pensions Regulator’s supplied information pack and, while the language related to incurring penalties is still quite soft, the legal position is now well beyond test cases.
The fact remains that the majority of businesses not only wishes to be seen but also to do the right things for their employees. As a result, the Pensions Regulator is keener to educate, rather than bark at (or bite) employers in respect of the most recent legislative changes. The intention is to be as fair as a system can allow, while working within the limits of the law. If it is a case of simple misunderstanding, the Regulator will take that into account and demonstrate the employer’s most effective route to compliance.
However, the time-honoured adage about ‘ignorance of the law being no excuse’ will result in a more stringent application of his powers, by way of enforcement, that coincides with a risk-based approach. As it happens, the Regulator has a range of both civil and criminal measures that can be exercised in order to achieve compliance with PAE. Additional discretionary powers allow the Pensions department to levy both estimates and interest charges on unpaid contributions, after directing the non-compliant company to calculate and settle any outstanding sums.
While the figure of £400 for a Fixed Penalty Notice, in effect a ‘parking fine’ for non-compliance, might seem like a drop in the ocean, failure to comply with statutory notices will result in the imposition of a sliding scale financial penalty, which can start at a lowly daily rate of just £50 but could equally be as much as £10,000, dependent on numbers of employees. Should civil law be invoked, the fee could be up to £5,000 for individuals and up to £50,000 for organisations.
There are other non-compliance fines to add to the mix, none of which will be particularly welcomed by any company also having to battle the irritable effects of ‘Brexit’, let alone making headway in times of reported austerity. Being allowed to pay them on-line will not lift the mood at all. Taken to a logical conclusion, company assets sales and restraining orders are all equally unwelcome, not least for the negative publicity that they can generate…all because the company did not comply with PAE.
As is fair to expect, there is an appeals structure in place but, with the best will in the world, compliance with pensions legislation is altogether a less troublesome and, ultimately, more satisfying direction. The rules are there to obey, although there might be better alternative opportunities to contemplate, not least those presented by Petaurum Solutions.
If there is one major imbalance in PAE, it lies in its inflexibility. While it is magnificent that it is a ‘free’ service provided by the government, investing for the future is a far from black and white issue, whether taken from an employee’s, or employer’s, viewpoint.
Petaurum can prove beyond any doubt that its fee chargeable programme can amortise itself most effectively, when several conditions are taken into account. If you look at the comparison data below, it highlights the benefits succinctly. Petaurum can formulate a pensions programme that meets individual demands on either side of the employment equation, thereby ensuring that compliance with pensions law is one of the simpler tasks for a business to undertake.