Newly released shows that a record proportion of companies are setting up their workplace pension after their deadline – known as a staging date – has passed.
The figures from Aviva for July, August and September this year show that 25% of businesses applying for their workplace pension with the company did so after the date set for them by the government watchdog, The Pensions Regulator (TPR). Businesses that miss their staging date put themselves at risk of a fine and limit their options for a pension scheme because not all providers will accept ‘late stagers’.
Latest figures from TPR show that in Q2 2017 it handed out almost 4,800 fines of £400 each to businesses that had failed to comply with their auto-enrolment obligations.
The proportion of companies sorting out their workplace pension two months or more ahead of their staging date has dropped to one in five (19%) – the lowest since Aviva began publishing the data.
However, this trend can, to some extent, be expected. Firstly, some businesses may have only formed in the last 12 months so haven’t had as much opportunity to plan in advance. Secondly, changes to the way auto-enrolment is rolled out mean there are now fewer companies that have a staging date more than two months away, in turn increasing the proportion of companies leaving it late.
Auto-enrolment in its current form, with businesses planning around staging dates, will only continue into the early part of next year. Significant changes are already taking place.
Since 1 October 2017, staging dates are no longer being given to new businesses. Instead, new companies will have auto-enrolment duties as soon as they hire their first employee and pay them a salary over £10,000.
Businesses also need to prepare for an increase in pension contributions. From April 2018 employers must contribute a minimum of 2% of an employee’s qualifying earnings, up from the current 1%. Employee contributions will be rising from 1% to 3%.