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Warning as new rules come into effect

Firms risk fines for failing to enrol staff in workplace pensions

pension potsSmall firms risk fines of to up £500 a day if they fail to comply with new legislation that requires them to provide staff with a pension.

Companies with fewer than 30 employees must begin introducing the government’s auto-enrolment scheme from today to provide a minimum pension for workers who may otherwise not save for their retirement.

Research by Now Pensions has revealed that 27% of firms are yet have not arranged a workplace pension for their staff.

Chief executive Morten Nilsson said: “Auto-enrolment is fast becoming a reality for thousands of firms across the country and there really is nowhere left to hide. Although it’s tempting to put it off, auto-enrolment is complex and the longer you leave yourself to plan, the easier it will be.”

Auto-enrolment began in autumn 2012, with the largest companies being the first to sign up.

More than five million employees have already been placed into workplace pensions and eventually as many 10 million will be enrolled.

The Pensions Regulator said that so far, escalating penalties have only been used on a handful of occasions.

However, Now Pensions said almost 350,000 businesses are unprepared. Auto-enrolment is a phased process and employers must initially contribute 1% of an employee’s qualifying earnings.

From October 2017 this will increase to 2% and to 3% in 2018.

 



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