Huge fines will be slapped on independent retailers who are are late setting up workplace pensions for their staff, experts have warned.
A poll carried out by Retail Express revealed eight out of 10 independent retailers were unaware they needed to set up pensions for employees and had not checked to find out their ‘staging date’ – after which they will have five months to make all necessary payroll changes.
EXCLUSIVE POLL: 80% of retailers unaware they face minimum fine of £400 if they fail to set up pension for employees
The biggest retailers in the UK are already complying with the scheme and face daily fines of up to £10,000 a day if they get it wrong.
But even shops with just one full time employee face a fixed penalty of £400 plus a daily bill of £50 if they miss their deadline. This could be any time between now and 2018, so it’s vital to look up your staging date as soon as possible.
Penalties for failure to comply with the pension rules
£400 – fixed penalty for failure to comply
£50 to £10,000 – daily fine for continued breach of the rules (depending on number of employees)
Dorset retailer Sue Young said: “Non-compliance penalties range from £400 up to £10,000 so it is worth looking at now to ensure you comply in time. Even if you have just one full time employee, you still have to do it.”
By 2018, minimum pension payments will be 8% of earnings above £111 per week, with the employer paying at least 3%.
Here is Retail Express columnist Sue’s guide on how to be ready for the changes:
PENSION REGULATIONS – ARE YOU COMPLIANT?
The new employer pension regulations may apply to you from August 2014, depending on how many employees you have and how you operate your PAYE scheme.
Non-compliance penalties range from £400 up to £10,000 so it is worth looking at now to ensure you comply in time.
Firstly you need to find out your STAGING DATE, this is the date when your duties as an employer start to apply. Your staging date could be anytime between now and 2018.
You can find out your staging date from this website www.thepensionsregulator.gov.uk
From your staging date you’ll then have five months before your scheme REGISTRATION DEADLINE. That is five months to set up and register your scheme, provide information to your employees and enrol them into the scheme and make any necessary changes to your PAYE scheme to make deductions from pay.
Don’t think that if all of your staff opt out immediately that you won’t have to set up and register a scheme.
AUTOMATIC ENROLMENT applies to all members of staff aged between 22 and state pension age for whom you deduct tax and national insurance (NI), and who is likely to have gross earnings of £192 or more per week. Staff earning less than this have the right to opt in to the scheme.
Staff can opt out after enrolment. There is an opt out period of one calendar month, during which they can opt out and get a full refund of any contributions.
Minimum payments into the pension are currently 2% of earnings above £111 per week, and will rise to 8% from October 1, 2018, with the employer paying a minimum of 1% rising to 3% (this is tax deductible).
I.e. currently the minimum employer contribution on a salary of £200 per week would be 89p per week plus the employee’s contribution.
There is a National Employment Savings Trust (NEST) scheme which is really easy to set up and administrate (www.nestpensions.org.uk) but it is also worth talking to a financial advisor to see which scheme works best for your business.
A good pension scheme will help with attracting and retaining staff. We’ve been talking to The Minster Partnership in Wimborne, Dorset (01202 882267) who have been really helpful.