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The power of a workplace pension audit

By Secondsight.

A workplace pension is the only employee benefit in the UK which is mandatory, resulting in all employers needing to enrol their eligible employees into an auto-enrolment qualifying workplace pension scheme. Following this, employees will then have the option to leave the scheme should they not wish to be in a workplace pension.

Automatic Enrolment (AE) was introduced following the Pensions Act 2008. The implementation of the legislative requirement to automatically enrol eligible employees into a workplace pension began in October 2012. AE was introduced in phases. In 2012 large employers who employed more than 250 employees were required to automatically enrol all eligible employees. In 2014 medium employers who employed more than 50 employees were required to comply, followed by all employers in 2016. By 2017, all new eligible employees of all employers were required to be automatically enrolled into a workplace pension.

Many organisations could be breaking the law with non-compliant pension schemes

Through no fault of their own, many employers are breaking the law and are not meeting regulations with their current pension scheme after AE was introduced over 11 years ago due to pension laws and regulations being complex, and often changing. Failing to adhere to these regulations can result in costly fines and legal consequences. In some cases, the Pensions Regulator can issue increasing penalty notices of up to £10,000 a day, leaving companies to face criminal prosecution and even imprisonment.

There could be many reasons why employers are non-compliant

Change in personnel

Organisations and charities evolve and grow all the time, and with this comes change in teams. If someone new has taken overlooking after your workplace pension schemes and made any change, this could mean you are no longer compliant.

Swapping payroll provider

You may not realise but changing your payroll provider can impact your workplace pension too. If you do not follow the correct guidelines and rules, it could result in a large fine.

Non-compliant communications

There are certain regulatory communications that you need to send to your employees to make sure they know all about auto enrolment and any change to their pension scheme. Failure to send the correct communications could lead to a breach.  

Loss of records

Even in the digital world we live in, records can be misplaced or lost. It’s important to keep records of what you have done, including all the arrangements you have made and contributions you have paid, for six years. Records of opt-outs must be kept for four years4. Any loss of record could result in a fine.

These are just a few of the reasons why employers could be falling short of meeting their required pension duties.

A pension audit

A pension audit helps employers identify and rectify any compliance issues, ensuring that their pension scheme is in line with the latest legal requirements.

A workplace pension audit is not a regulatory requirement but a strategic move that can benefit both employers and employees. It helps to ensure compliance with pension laws and aims to protect employee interests, enhance operational efficiency, foster employee engagement, future-proof the pension scheme and build a competitive advantage for the company. Employers who invest in a thorough pension audit demonstrate their commitment to the financial wellbeing of their workforce, creating a positive and sustainable work environment for all.

To find out more about the power of a pension audit, attend our upcoming webinar, delivered by employee benefits and financial wellbeing experts, Secondsight, taking place on Wednesday 29 November 2023 at 11am. Register now.

Please note

  • This blog is for general information only and does not constitute advice.
  • A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.
  • The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.
  • Pension income could also be affected by interest rates at the time benefits are taken.
  • The tax treatment of pensions in general and tax implications of pension withdrawals will be based on individual circumstances, tax legislation and regulation, which are subject to change in the future.
  • Secondsight is a trading name of Foster Denovo Limited, which is authorised and regulated by the Financial Conduct Authority.

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