The number of businesses fined by The Pensions Regulator for auto-enrolment errors has risen 144 per cent in the past year.
Figures compiled by commercial law firm EMW have shown 35,810 businesses were fined in the year to September, up from 14,650 in 2016 to 2017.
Fines for automatic enrolment errors totalled £42m in the year, up from £12.6m in 2016 to 2017, The Pensions Regulator confirmed.
According to EMW the increase was partly due to the expansion of the auto enrolment pension regime to cover smaller businesses.
The law firm explained the complexity of auto enrolment schemes meant smaller businesses without in-house HR functions were at risk of making errors when attempting to auto-enrol staff.
The increasing number of fines does not necessarily mean that employers are deliberately avoiding auto-enrolling staff, it added.
FTAdviser reported in September that errors were found in half of the data employers sent to providers on the auto-enrolment contributions of their staff, based on contributions to more than 10,000 schemes between August 2017 and July 2018.
EMW stated one problem for SMEs was poor record-keeping as they may not wish to pay for specialist payroll software or an accountant, and may lack the resources to accurately calculate an employees’ contribution to enrolment schemes.
Jon Taylor, principal at EMW, said: "The sharp rise in the number of fines by TPR suggests that SMEs are having real problems keeping on top of complex auto-enrolment schemes.
"While larger businesses will have the necessary infrastructure and expertise to correctly auto enrol workers, the same does not always apply to smaller businesses."
Businesses can also be fined for not providing regular updates and data submissions on employees to TPR, as this is regarded by the Pensions Regulator as non-compliance.
And auto-enrolment errors can become increasingly costly for employers if they go unreported for an extended period of time as the regulator can levy larger fines if it uncovers longstanding issues.
Mr Taylor said: "Considering the huge number of businesses now being caught by fines perhaps the Pensions Regulator needs to consider moderating the scale of the fees especially for SMEs."
A TPR spokesman said: "The vast majority of employers are successfully meeting their automatic enrolment duties.
"The rise in the number of times we have used our powers is in line with the rise in the number of employers with automatic enrolment responsibilities. We have no evidence there is any widespread issue of employers keeping inaccurate records or paying incorrect contributions."
He added: "Research carried out into employer awareness and understanding of automatic enrolment shows the vast majority of employers are aware of their ongoing duties, which include record keeping and maintaining contributions, and said they are confident they are complying successfully.
"Where an employer does not have expertise in this area, such as a dedicated payroll department, we encourage them to seek help from a professional adviser to ensure they meet their legal duties.