Personal PensionApr 28 2016

TPR issues record fines for auto-enrolment failures

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TPR issues record fines for auto-enrolment failures

The Pensions Regulator hit employers failing in their duty to provide auto-enrolment pension schemes with a record number of fines for the first three months of the year, as smaller firms join the ranks of companies who have to comply with the law.

TPR issued 96 escalating penalty notices against employers in the first quarter of 2016, the most it has issued over any quarter, bringing the total to 127.

The notices are among the statutory powers TPR has to help ensure employers comply with auto-enrolment duties.

They specify the date by which an employer must comply with certain actions or be subject to a fine which builds up at a daily rate, from £50 to £10,000 per day.

Over the first quarter of the year, TPR also issued 3,057 compliance notices - issued to remedy a contravention of one or more automatic enrolment employer duty provisions - bringing the total to 7,834.

Under legislation introduced in 2012, all employers must eventually offer a workplace pension scheme and automatically enrol eligible workers in it.

Larger employers have been required to apply the law since October 2012. But now smaller firms have to meet the same rules that will apply to all employers by 2018.

Kate Smith, head of pensions at Aegon said “it was good to see the Pension Regulator has teeth” and is using its powers to fine non-compliant employers, “sending out a message failing to play by the automatic enrolment rules is simply not acceptable”.

But she added it was “not unsurprising” to see an upward trend in the number of fixed and escalating notices, given the smallest employers now enroling their staff in schemes “probably have little pension experience and are unlikely to be turning to advisers for support”.

To avoid being fined, employers must make sure they start planning early, find out their staging date and understand what and when they need to do to comply with their automatic enrolment duties, she said.

However TPR said its research showed 95 per cent of the first small employers required to put their staff into a workplace pension have now complied with the law, showing auto-enrolment is successful for all sizes of employer.

Minister for pensions, Baroness Ros Altmann, said: “Automatic enrolment is delivering fundamental change to workplace pension saving.

“So far over 100,000 employers have enrolled over 6 million workers. Levels of compliance amongst employers has been consistently high and I am pleased with all the steps the Pensions Regulator has put in place to support the huge number of smaller employers who have recently begun to undertake their duties.

“The aim of automatic enrolment is to get all employers setting up pension schemes for their staff. It is most encouraging to see that even the smaller employers are managing to do this, and the proportion facing enforcement action has stayed remarkably low.”

Charles Counsell, executive director for automatic enrolment, said: “Most employers comply on time and we continue to see compliance rates in the high nineties. Others need a nudge and are prompted to meet their duties when one of our notices comes through their letterbox.

“It’s simply not fair for staff not to receive the pension contributions they are legally due. But failing to act also means an employer risks clocking up a significant penalty until they put things right.

“Our message remains that if things aren’t going well, then talk to us; don’t ignore us.”

Selected powers used in the period

Power DescriptionNumber in periodNumber to March 2016
Information Notice

The power to demand information and documents under section 72 of the Pensions Act 2004

1269
Inspection

The power to inspect premises under section 74 of the Pensions Act 2004

324
Warrant

The power to search premises and take possession of content under section 78 of the Pensions Act 2004

00
Compliance Notice

A Compliance Notice under section 35 of the Pensions Act 2008 to remedy a contravention of one or more automatic enrolment employer duty provisions

3,0577,834

Unpaid Contributions Notice

An Unpaid Contributions Notice under section 37 of the Pensions Act 2008 to remedy a late or non-payment due to a qualifying pension scheme

187409

Fixed Penalty Notice

A Fixed Penalty Notice under section 40 of the Pensions Act 2008 of £400 for failure to comply with a statutory notice or some specific employer duties

8062,234

Escalating Penalty Notice

An escalating penalty under section 41 of the Pensions Act 2008 of between £50 and £10,000 per day (depending on size) for failure to comply with a statutory notice

96127
Total4,16110,697

Source: The Pensions Regulator

ruth.gillbe@ft.com