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How to turn £400 into £40,000

 

Posted on 14 June 2017

Unfortunately, we’re not talking about winning the lottery or a get rich quick scheme. We are in fact talking about high street footwear firm, Johnsons, who turned their fine from The Pensions Regulator (TPR) into a bill for over £40,000 for not complying with automatic enrolment requirements.

What is auto-enrolment?

Auto-enrolment which was first introduced in 2012, ensures that eligible workers are automatically enrolled into a pension scheme and employers are legally required to make contributions.

What went wrong for Johnsons?

Johnsons staging date was 1st May 2014 with a deadline of filing their declaration of compliance within 5 months after the staging date. After failing to do so, they were contacted by TPR numerous times. Johnsons’ lack of action led TPR to then issue a Fixed Penalty Notice of £400.

Following their initial fine, Johnsons notified TPR that they were refusing to pay due to “the pressures of work” being the reason why they did not fulfill their duties. This wasn’t a good enough reason for TPR who then issued an Escalating Penalty Notice of £2,500 per day – a fine which quickly escalated to £40,000.

After refusing to pay the Escalated Penalty Notice, TPR lodged a money claim with the County Court. In the end, Johnsons were ordered to pay the full £40,000 plus an additional £2,000 in legal fees – ouch!

How to avoid a fine

Compliance is key.

TPR are keen to stress the Inspections to check for compliance are increasing and TPR have started a name and shame policy in addition to the fines.

As well as investigations, TPR have started nationwide spot-checks. Starting in London and then moving on to Greater Manchester, TPR will be visiting hundreds of businesses across the country to check employers are meeting their duties.

If you’re unsure of your obligations, you can use the Duties Checker on TRP’s website to understand.

Smith Cooper can help with the set up and day-to-day running of the scheme so you can concentrate on growing your business. Get peace of mind that your business is fully compliant with the workplace pension legislation.

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