A few years have gone by now since the start of Auto Enrolment, the majority of companies have embraced it whole heartedly and are doing everything that they can to ensure to they are communicating Auto Enrolment in the right way.
Most of their employees are joining their new scheme, and those that choose to leave, or opt out, are doing so for what they believe to be good reasons. Let’s face it, from the employees view point Auto Enrolment is like a pay rise – 1% now, 2% in April 2018, and then 3% the year after that – and when they realise this… how many would opt out? Not many.
We do however occasionally see companies where EVERYONE opts out… or the vast majority, which bucks the trend and as you can imagine demonstrates that something untoward could be going on.
Now we realise that for some a new scheme is an unexpected – and sometimes – unwanted expense, but Auto Enrolment is bound by law, and those companies that choose not to comply are playing a dangerous and potentially expensive game.
As responsible employers, everyone has some obligation to ensure that their employees plan for their future beyond working age. If an employer expresses ANY cynicism about Auto Enrolment or pensions – they may be seen to be coercing their employees into opting out, and that is a breach of their obligations.
Inducement or encouragement to opt out or leave the scheme is something that, as a responsible and registered provider, we would have to report to The Pensions Regulator.
If they investigate and conclude that is what has happened their penalty powers include:
- A fixed penalty notice of £400;
- A daily penalty notice of £50 per day for employers with fewer than 5 employees, or £500 per day for less than 50 employees while a breach continues. It’s more for larger firms;
- A range of other penalties, which ultimately for wilful non compliance includes personal criminal prosecution of the key players within a business.
So please – when promoting your own Auto Enrolment scheme – don’t fall into that trap. Simply provide the necessary information to employees, and promote the scheme as the positive benefit for them, and for your business, that it really is.
As some employers are starting to find out… anything else could be a lot more expensive.