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December 4, 2018
As thousands of small and micro businesses approach their staging dates for pension auto-enrolment, new figures from the Pensions Regulator show there has been a significant increase in enforcement action for non-compliance. The findings have renewed concerns that some smaller employers are not fully prepared to meet their auto-enrolment obligations.
Also this month, the Government has published detailed proposals on its plans to reform apprenticeships, which include providing extra funding to firms that are too small to pay the new Apprenticeship Levy. The findings come as a study by the Federation of Small Businesses revealed that small firms could ‘double’ the number of apprentices they take on, given the right funding and incentives.
Enforcement action against businesses that have failed to meet their pension auto-enrolment requirements has risen by 306%, according to data from the Pensions Regulator.
The data reveals the watchdog used its enforcement powers on a total of 8,812 occasions between April 2015 and March 2016. During this time some 6,241 compliance notices were issued, while 2,002 fixed penalty notices were also handed out.
The findings come as hundreds of thousands of small and micro businesses are approaching their staging dates for automatic enrolment.
Deadlines for auto-enrolment have been coming into force gradually since 2012, starting with the largest businesses. Enrolment for small businesses (five to 49 employees) and micro-enterprises (one to four employees) is still ongoing, and these groups will have a staging date between 2015 and 2018.
Under the auto-enrolment regulations, employers are required to automatically enrol eligible workers into a pension scheme, and make a minimum level of contribution. Even those who employ a single worker, for example a carer or a nanny, must comply with the auto-enrolment legislation.
Of the businesses still to implement auto-enrolment, the Pensions Regulator claims that 57% are micro businesses, with some 34% of these employing just one worker.
However, the Regulator’s report found that 79% of micro employers and 88% of small employers due to stage in the next two years gain an understanding of auto-enrolment one to two months before their staging date.
Charles Counsell, Executive Director for auto-enrolment at the Pensions Regulator, stated: ‘Our key challenge in the past year has been to engage hundreds of thousands of small and micro employers and to help them prepare for automatic enrolment.
‘The compliance rates achieved have been consistently at the top of our expectations and the savings landscape has been transformed. But we know the job is not yet done and there are still significant challenges ahead.’
To read more on this issue, and for advice on how to meet your auto-enrolment responsibilities, please visit the Hot Topics section of our website.
The Government has announced detailed proposals for how the new funding arrangements for apprenticeships will work under a reformed system, including additional financial support for firms that are small enough to be exempt from the Apprenticeship Levy.
Under the plans, employers that are too small to pay the levy – around 98% of employers in England – will have 90% of the costs of training paid for by the Government.
It is proposed that extra support – worth £2,000 per trainee – will also be available for employers and training providers that take on 16 to 18-year-old apprentices or young care leavers. Employers with fewer than 50 employees will also have 100% of training costs paid for by the Government if they take on these apprentices.
The proposals came very soon after the Federation of Small Businesses (FSB) released a report showing that small businesses could ‘double’ the number of apprentices they take on, given the right funding and incentives.
The study found that one in four FSB members already employ an apprentice, but a further quarter would consider taking one on in the future.
Mike Cherry, National Chairman of the FSB, said: ‘Getting apprenticeship reform right, including changes to existing funding arrangements, is key to apprenticeship growth among small businesses and the Government achieving its target of three million new apprenticeships over the course of this Parliament.’
However, others have called for the introduction of the levy to be delayed. Carolyn Fairbairn, Director General of the Confederation of British Industry, stated: ‘Though business understands the fiscal challenges, it would be a great mistake to rush ahead before a viable scheme is ready.’
The Government is inviting feedback on the proposals until 5 September.
Meanwhile, the Scottish Government has been seeking views on the best use of the Apprenticeship Levy in Scotland.
Minister for Employability and Training, Jamie Hepburn, recently said the Scottish Government was committed to working with employers to develop a ‘distinctly Scottish approach’, which will do more to support apprenticeships, widen skills development and drive closer engagement with industry’.
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