A solicitor is warning East Yorkshire businesses to prepare for the introduction of workplace pensions as the next round of auto-enrolment looms.
James Ashton, director of Sandersons Solicitors based in Morton House, Morton Lane, Beverley, is advising companies to check their staging date – the date on which their employees are automatically enrolled on the workplace pension scheme – to ensure they have fulfilled all the required criteria.
Employers without a company pension scheme are obliged to set one up before their staging date and enrol all employees over 22 years of age and earning more than £9,440 per annum.
Failure to do so could result in hefty fines of up to £500 per day, Mr Ashton said.
Workplace pensions were introduced in October last year as a way to encourage employees to save for their retirement.
The maximum state pension currently available is £110.15 per week and money from workplace pensions is aimed at topping that up to help people afford better retirements.
Many larger companies have already rolled them out and smaller firms will have to do so at various dates until 2018.
For some it could be as early as October this year, Mr Ashton said, although auto-enrolment for most small business will not start until 2015.
Mr Ashton said that as well as the intrinsic risk of incurring heavy fines for not complying with the law, small business owners must budget for the administrative and cost burden of introducing pensions.
For the first few years after auto-enrolment employers will be paying an extra one per cent on top of their employees’ salaries, but this will rise to three per cent over time.
Mr Ashton said: “The message we are getting from clients and other business people we speak to is there is a lot of confusion around the introduction of workplace pensions, particularly among smaller businesses.
“This is particularly the case around the employer’s obligations and their auto-enrolment date. Our advice to small businesses is go online to find out when your staging date is so you can plan effectively and avoid pension bills that you can’t afford.”
Mr Ashton added that although it is possible for employees to opt out of the scheme, the law bans employers from offering incentives to them to do so.
“Doing this could land you in hot water,” he said.
“The Pensions Regulator is providing a whistleblowing facility to ensure it does not happen and will take a dim view of anyone flouting the law.”