Pension problems as firms fail workers and self-employed say no
Almost 5,000 firms failed to meet auto-enrolment deadlines while those who work for themselves are turning their back on pensions
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Almost 5,000 small businesses have been hit with compliant notices or fines for failing to sort out their company pension schemes.
The figures are revealed in a Pensions Regulator report which shows that 4,818 compliance notices have been issued to firms that have failed to comply with pension auto-enrolment rules in time, while 1,594 £400 fines have been issued.
The rules require firms to put their staff into a workplace pension and 90 per cent have successfully done so with 5.8 million people being automatically enrolled.
Pensions minister Ros Altmann said: “It is really encouraging to see that so far, the vast majority of small and micro employers have set up a workplace pension for their staff and are helping them on their way to a more financially secure retirement. From now on, the smallest employers will start to meet their obligations and we must ensure they know what to do and have help if they need it."
But executive director of automatic enrolment Charles Counsell warned: “Automatic enrolment is the law for all employers and we will use our powers where necessary to get them back on track.”
Self-employed people, on the other hand, are struggling to save into a pension. Most would rather invest cash in a savings account, cash Isa or property, reckons Citizens Advice, with half not trusting pensions.
The charity's report identifies three key issues standing in the way of self-employed people saving into a pension:
Lack of understanding: more than two thirds of self-employed people (67 per cent) do not understand the tax breaks provided by a offered by cash ISAs and private pensions with a quarter (25 per cent) wrongly thinking that an Isa offers better tax breaks than a pension.
Lack of trust: half of self-employed people (50 per cent) say they do not trust private pensions as a safe place to invest their money.
Lack of information: more than a quarter of self-employed people (27 per cent) say they have never received any information or advice about pensions from anyone.
Since 2001, self-employment has increased by 32 per cent to more than 4.5 million. Yet the number of self-employed people paying into a pension has more than halved, falling from 1.1 million in 2001/02 to just 450,000 people in 2013/14.
Gillian Guy, chief executive of Citizens Advice, said: “It is really important that self-employed people are offered up front information about how pensions can work for them so they can make an informed choice as to the best retirement savings plan. Paying into a pension also needs to be made easier and come with similar incentives for self-employed people as those currently enjoyed by employees.”
Pensions Regulator tips to help employers comply with automatic enrolment :
- Start planning in good time. The majority of compliance notices were issued because employers had left their preparations too late.
- Employers and their advisers should be aware that an employer issued with a fine will still be required to pay it, even when they have complied with their duties.
- Employers can become non-compliant by failing to complete their declaration of compliance because they wrongly assumed their business adviser was doing this for them. Employers and their advisers should be clear who is completing what automatic enrolment task and advisers should be clear about what services they offer.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments