Farmers face fines if they fail to comply with pension rules

Farmers are among those at risk of fines for not complying with new workplace pension auto-enrolment rules.

The law on workplace pensions has changed meaning every employer must enroll employees on an approved workplace pension scheme.

This applies to all employees aged between 22 and the state retirement age who are earning more than £10,000/year.

In the last three months of 2015 a total of 1,021 employers were issued with a fixed penalty notice for failing to comply with the new rules, according to the Pensions Regulator.

The number of fines is expected to rise dramatically as more small to medium-sized enterprises reach their staging dates –  the date automatic enrolment duties take effect for an individual business.

See also: How to comply with new auto-enrolment pension rules

Richard Grayson, managing partner at Nicholsons accountancy firm, said: “It is almost certain that the number of fines will increase as more employers join the auto-enrolment scheme.

“The later joiners will generally be the smaller employers who have no support team, and may be loathe to pay for help and assistance.

“I think some smaller employers will try to arrange their affairs in such a way that they don’t have to join the scheme, for example by cutting staff hours or taking on more part-time employees, so that they have no ‘eligible’ employees.

“One thing they mustn’t do, of course, is encourage their staff to opt out of the scheme, as this could lead to even bigger penalties.”

Julia Ridger, employee benefits director at Smith & Williamson, added that any farming business which had reached its staging date and had yet to comply, or had a staging date approaching this year, should get in touch with a professional adviser to avoid falling foul of the Pension Regulator.

Who must employers auto-enrol into a pensions scheme? 

• Businesses must enrol all employees who are aged between 22 and state pension age and earning more than £10,000 into an eligible pension scheme. This includes migrant workers and family members who work on the farm and are paid a wage.
• Even if eligible employees do not wish to make contributions to a pension pot, they must be enrolled. Once this has been implemented, employees will have the opportunity to opt-out of the scheme.
• Part-time workers who earn less than £10,000 can ask to take part if they want to and, if they earn more than £5,564, their employer will be obliged to make a contribution too.

Smaller employers are gradually being included in auto-enrolment.

All businesses have been issued with a staging date. This is the date from which they are required to roll out their new pension scheme.

Farmers should get a letter 12 months before their staging date, but can find out when it is by visiting the Pensions Regulator website and entering in their PAYE reference number.

Employers who do not pay via PAYE will have a staging date of 1 April 2017.

Businesses can request to postpone this date for up to three months.

This may be useful for farmers who employ seasonal workers whose contracts are nearing an end as it means they can avoid having to enrol them on a pension scheme.