Member Article

Firms must embrace new workplace pensions says Yorkshire accountants

Firms must embrace the new regulations about workplace pensions or they will face stiff financial penalties, according to Yorkshire accountants Garbutt & Elliott.

The Pensions Regulator has initiated 89 investigations into employers over suspected automatic enrolment non-compliance.

Auto-enrolment was launched for the UK’s largest employers in October 2012.

The reforms, which will also capture medium and small firms between now and 2018, require companies to set up a pension scheme for their employees in line with rules laid out by the Government.

Employers must contribute to the scheme, but employees can opt out.

The Pensions Regulator, which is responsible for monitoring workplace pensions, says 1,153 major employers have registered an auto-enrolment scheme so far, with 8% facing scrutiny over possible non-compliance with their legal duties.

Lorraine Young, (pictured) the payroll manager at Garbutt & Elliott, who have offices in York and Leeds commented: “These figures are worrying and the difficulties that followed the introduction last year of Real Time Information (RTI), which was the biggest change in the PAYE system since its introduction in 1944.

“I fear that we will see more and more instances of non-compliance as smaller firms reach their ‘staging dates’, which is when they are legally bound to implement workplace pensions.

“I don’t think the communication around auto-enrolment hasn’t been good enough.”

“We are here to advise about the options, the duties and the consequences of the revolution in workplace pensions, which face every single employer in the country,” she added.

Stephen Groves (pictured above), an independent financial adviser at Garbutt& Elliott’s Wealth Management division, warned that some pension providers would not be able to cope with the demand created by the revolution in workplace pensions.

Mr Groves said that some major providers had already confirmed they might close their books due to over capacity and won’t accept employers with under six months until their staging date.

He said: “Businesses will have the difficult task of complying with the auto-enrolment regulations at a time of unprecedented demand for the services of pension providers and advisers.

“The penalties for non-compliance are stiff, with persistent offenders, who employ over 500 people, liable for fines of £10,000 per day. Even small firms, employing just five people, could face fines of £500 a day. Clearly, doing nothing is not an option,” said Mr Groves.

This was posted in Bdaily's Members' News section by Clare Burnett .