The number of businesses failing to meet their auto-enrolment obligations increased fourfold in the 2015 to 2016 financial year, according to The Pensions Regulator, as increasing numbers of smaller businesses reached their staging date.
Its fourth annual commentary and analysis report revealed the regulator had used formal powers against businesses that breached their obligations on 8,812 occasions; up from 2,169 the previous year.
The 8,812 figure compared to a total of 64,283 employers which completed their declaration of auto-enrolment compliance over the financial year.
Of those 8,812 businesses, only 2,124 actually received fines.
Although there was a marked increase in The Pensions Regulator’s use of powers, a spokesperson for the regulator said it had actually expected the figure to be greater.
There were two reasons for the increased use of powers: the sheer number of small businesses staging and the fact that small businesses were less likely to focus on human resources compliance than larger businesses.
The number of non-compliant businesses was likely to continue to increase as more micro-businesses reach their staging date, according to the regulator.
Recent figures released by Now: Pensions - which reported one in five businesses signing up to the scheme do so after their staging date - appeared to confirm this.
Overall, The Pensions Regulator was upbeat about the results pointing out two thirds of all employees were now active members of a pension scheme, compared with just under half in 2012.
The Pensions Regulator also reported compliance rates amongst the first group of small and micro employers to undergo automatic enrolment was above 95 per cent.
Of those members who had joined auto-enrolment master trusts, 97 per cent were in schemes with Master Trust Assurance Framework accreditation.
Charles Counsell, executive director for automatic enrolment at The Pensions Regulator, said his key challenge in the past year has been to engage hundreds of thousands of small and micro employers to prepare for automatic enrolment.
He said: “We needed to target these employers in new and innovative ways. The hard work and commitment of the many organisations who support employers - from trade bodies to employer representative bodies - has made a huge difference.”
Darren Philp, director of policy and market engagement at The People’s Pension, agreed it is reassuring to note that employer compliance remains high.
“Even with the revised numbers we have seen from The Pensions Regulator today, the challenge for those small employers still to stage remains demanding,” he noted.
“Auto-enrolment isn’t as easy for small employers as it should be and we know that they need help and support to get it right; the industry has a vital role to play in supporting them with their task.”