The trustee of workplace pension provider Smart Pension has received a £15,000 fine by The Pensions Regulator (TPR) for failing to report nearly £900,000 of unpaid pension contributions.
The master trust, with almost half a million members, didn’t tell the watchdog that 498 employers had failed to pay contributions that were due.
Smart Pension also didn’t inform the pension scheme members of the issue.
The findings are reported in a determination notice published today (22 June) following The Pensions Regulator's investigation, which concluded that the scheme trustee, EC2 Master, didn’t ensure the scheme had a proper reporting system in place to comply with statutory requirements.
Failing to report material payment failures is punishable by a civil penalty under Section 10 of the Pensions Act 1995, The Pensions Regulator stated.
In total, around 2,115 members were affected by the failures between August 2015 and May 2017.
They were only informed that their contributions had not been collected and invested after The Pensions Regulator informed Smart Pension it was their duty to contact them.
Following the investigation, new systems and processes have now been implemented by the trustees and Smart Pension.
The provider also worked quickly with TPR to report the employers so enforcement action could be taken where necessary to help protect their members.
According to Nicola Parish, The Pensions Regulator’s executive director of frontline regulation, it is vital that workers can be confident that their contributions are being collected and invested properly so that their savings can grow.
She said: “They have a right to know if payments are not being made and we need to know so that we can investigate why it is happening.
“Smart Pension’s systems and processes were ineffective and the trustee’s failure to act on its responsibilities was unacceptable, but we are encouraged by the commitment of both to improving the way they work.
“We are clear that schemes must have efficient and robust processes in place to protect members’ funds. We will take action where this is not the case.”
Andy Cheseldine, Smart Pension's independent chair of trustees, argued that the provider fixed the reporting issues within weeks.
He said: “We now have a system in place which includes an automated ‘health check’, an algorithm which runs checks every day on every single employer to make sure they are keeping up with their payments.
"We are very grateful to The Pensions Regulator for its acknowledgement of the improvements we have made and our commitment to keep working closely with them. We take our duties very seriously and what happened was not acceptable. However, we are confident that with this new system in place, this will not happen again.
"It is important to remember that nearly all the employers we reported have now paid their lapsed contributions, and that this finding was for a failure to report payments that had been stopped by employers."
In February, the pensions watchdog issued a £70,000 fine to Now: Pensions due to administrative issues with collecting contributions, and to failing to communicate these problems to members.
maria.espadinha@ft.com
