Figures from The Pension Regulator have revealed the second quarter of this year saw a rise in small businesses failing to comply with auto-enrolment rules, requiring TPR to use its powers 4,489 times.
This reason accounted for almost a third of the total number of times the regulator has used its powers since the first businesses staged in 2012.
It was also around half the total number of the 2015 to 2016 financial year, and an increase on the previous quarter, when the regulator used its powers more than 4,161 times.
In its latest quarterly update the regulator stated it was “encourged” by the number of small business employers putting employees into pension schems.
But it warned employers to check their auto-enrolment obligations or face fines if they fail to comply.
Charles Counsell, The Pensions Regulator’s executive director for AE, said: “Whilst the vast majority of employers are complying with the law, some small employers are still risking fines by failing to understand how it affects them.”
Over the period 27 businesses appealed The Pensions Regulator’s decision to issue a fine at the Tribunal Service, out of a total of 70 since 2012.
To date the tribunal had rejected every appeal it ruled on.
The Pensions Regulator gave two examples of non-compliant employers.
The first, a garage owner, had failed to complete his statement of compliance. He claimed he had delegated it to a junior member of staff, who had failed to complete it.
The second, a travel agent, had only one non-eligible employee, and assumed because the employee was not eligible, they did not have to do anything.
The Pensions Regulator pointed out that even if employers are not eligible for AE, the employer has an obligation to write to the employee offering them the opportunity to opt-in to a scheme, and then complete a statement of compliance.
“We recognise that all employers are different – but the law is still the law,” Mr Counsell said. “Don’t risk a fine, look out for a letter from us, take time to read the essential guide we send out to all employers with this letter and come to TPR’s website for all the information and guidance you need.”
Over the June quarter, The Pensions Regulator estimated between 75,000 and 76,000 businesses reached their staging date.
This number is expected to increase steadily over the next two years, reaching an estimated peak of between 258,000 and 208,000 in the December quarter of 2017.
A spokesperson for The Pensions Regulator told FTAdviser the number of instances in which it would use its powers was likely to increase in line with the number of new businesses staging.
Laurence Sanderson, a business consultant and AE specialist at Sterling & Law, said, generally speaking, The Pensions Regulator was doing as much as it could to communicate AE rules to employers.
However, he added the five-month period between the staging date and the date at which a statement of compliance is due meant many employers were only discovering they were not compliant five months in.
That, he said, meant they would be liable to pay five months-worth of pension contributions in arrears. He said a reduction in that five-month gap could help the employers that were “plodding along in blissful ignorance” of the rules.
TPR pointed out that it sends employers letters one month before their staging date, one month after it, and one month before the statement of compliance deadline.
james.fernyhough@ft.com
