Auto-enrolment is a government pension scheme which, unless employees have already signed up for a workplace pension, automatically diverts a portion of an employee’s monthly salary into a pension pot. The employer and the government also make a contribution each month. Employees can choose to opt out of the scheme, but in so doing they would lose their employer’s contribution.
Currently, the minimum contribution is 2% of an employee’s wage; made up as follows:
- 8% paid by the employee
- 1% paid by the employer
- 2% in the form of tax relief from the government
The minimum contribution is set to rise in April 2018 to 5%.
According to The Pension Regulator (TPR) director, Darren Ryder, “automatic-enrolment is not an option, it is the law” and now Stotts Tours has become the first UK firm to be penalised for breaking this law.
Stotts Tours and its Managing Director admitted at Brighton’s Magistrate Court to “wilful failure to comply with pensions law” and had to pay a hefty price – more than £39,000 in fines and costs, on top of £14,400 in civil fines and £10,000 in backdated pension contributions. The Managing Director also had to pay a fine of £4,455.
If you are an Employer or Employee with questions regarding pension entitlements, please contact our Employment specialist Jane Elgar.