UK micro-businesses are collectively facing fines of up to £22m due to a lack of understanding around auto-enrolment pensions, a new report has warned.
The Pensions Regulator estimates that around 262,000 micro-businesses, defined as firms employing between one and four people, are set to “stage” – or be required to set up a workplace pension – this year and next.
The Pensions Regulator has said that 21 per cent of micro-employers still have a limited understanding of their duty to automatically enrol staff onto schemes in the weeks before they stage.
Paycircle has estimated that, because of a lack of understanding, micro-businesses could collectively face £22m of fines in 2016 and 2017. It said the onus should be on the regulator and all workplace pension providers to help.
“The Pensions Regulator has done a huge amount to raise awareness of auto-enrolment responsibilities among the UK’s smallest businesses,” said Catherine Pinkney, co-founder of Paycircle.
“Yet despite this comprehensive marketing and educational push, a sizeable chunk of micro employers are still very much in the dark as to what to actually do as their staging date descends on them.
“Given the no-nonsense approach of the regulator in handing out fines, these businesses need to sit up and take note or risk being slapped with a sizeable penalty.”