Manchester

Oldham bus firm first to be fined for pension law breach

Stotts bus Image copyright Gerald England
Image caption Stotts Tours did not set up pensions for staff

A bus company has become the first UK firm to be sentenced for failing to enrol staff on a pension scheme.

Stotts Tours of Oldham, Greater Manchester, should have begun pension contributions for staff from 2015, The Pensions Regulator (TPR) said.

The firm and its managing director Alan Stott previously admitted wilful failure to comply with pensions law.

They were ordered to pay more than £39,000 at Brighton Magistrates' Court.

District Judge Teresa Szagun said: "Initially Mr Stott's attitude was to bury his head in the sand. This later left him in a position where he was out of his depth."

The fines and court costs come on top of £14,400 in civil fines already owed for failing to comply with the law on automatic pension enrolment.

Stotts Tours must also pay an estimated £10,000 in backdated pension contributions for its staff, as well as ongoing contributions.

Magistrates fined the company £27,000 and ordered it to pay £7,400 in costs and a £120 victim surcharge on Wednesday.

Stott, 69, was ordered to pay a £4,455 fine and a £120 victim surcharge.

According to the Pensions Act 2008, every employer in the UK, where appropriate, must contribute towards a pension scheme for their staff in a process known as automatic enrolment.

Auto-enrolment has been phased in by the government since 2012, so that workers can save to top-up their state pension on retirement.

What is automatic enrolment?

  • Unless they are already signed up to a workplace pension, a slice of a worker's pay packet is automatically diverted to a pension savings pot, which is invested until retirement
  • Their employer also makes a contribution, as does the government
  • Individuals have the option to opt out if they wish, although that will mean losing the employer's contribution
  • Anyone on a short-term contract, working where an agency pays their wages, or who is on maternity, adoption or carer's leave should still be eligible
  • The total minimum contribution is currently set at 2% of earnings (0.8% from the worker, 1% from an employer, and 0.2% as tax relief from the government)
  • From April 2018, it will increase to 5% of earnings (2.4% from the worker, 2% from the employer, and 0.6% as tax relief)
  • From April 2019 onwards, it will rise to 8% of earnings (4% from the individual, 3% from the employer, and 1% as tax relief)

In the first prosecution of its kind, TPR found 36 staff from Stotts Tours should have been put on a pension scheme from June 2015.

TPR director Darren Ryder said "automatic enrolment is not an option, it is the law".

He said: "It's extremely disappointing that a tiny minority of employers continue to flout the law by denying their staff the pensions they are entitled to."

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