The amount of businesses being fined for failing to provide staff with new Government pensions has multiplied by 14 within three months, according to Watchdogs.
Nearly six million employees have enrolled themselves into the new scheme, which has been designed to encourage workers to save money for when they retire. Failure to follow the scheme can result in small businesses with more than 5 employees facing a fine of up to £500 a day and for those with less than 4 employees £50 a day.
During the last quarter of 2015 thousands of small firms became officially required to give employee pensions for the very first time. The Pensions Regulator has issued over two thousand warning letters to 2,596 business owners who had failed to set up the required arrangements on time.
Since the policy first came into being three years ago in the last quarter of 2012, approximately two firms a day were issued letters to date a total of 4,818 companies have received warning letters. Large firms such as; Tesco, Shell and BP were the first to enrol their employees into the pension’s scheme. Starting in 2015 small businesses are now also forced to meet the terms.
The new findings will roll over the concerns that MPs once had that owners of small businesses have “fewer resources” to deal with the pension schemes compared to bigger businesses. Experts in the industry have advised that many employers will find it hard to come up with the cash that will add to the scheme as they are already worried about the new national minimum wage for 25’s and older which will increase to £7.20.
In 2015, a report carried out by the National Audit Office brought to light that the government had jotted down plans for an “emergency pause” for those who need more time to deal with the extra burden of the pension scheme for their employees. The government considered delaying the scheme to increase savings.
Policy Director of the Federation of Small Businesses, Mike Cherry has said;
“It is clear that many small firms will struggle to get to grips with the legislation and implement is correct, while large numbers of small firms are concerned about the cost to their business.
“We advise smaller employers to plan ahead and ensure they are prepared for their staging date and seek advice and guidance from trusted parties.”
Baroness Ros Altmann, Minister for Pensions has also commented;
“From now on, the smallest employers will start to meet their obligations and we must ensure they know what to do and have help if they need it.
“Thanks to automatic enrolment workplace pensions are becoming the norm and we expect 9 million people to be newly saving or saving more.”