Pensions Regulator  

Regulator relaxes AE enforcement in response to Covid-19

Regulator relaxes AE enforcement in response to Covid-19

The Pensions Regulator is giving employers more time to pay contributions without triggering any enforcement action, in a move designed to reduce burden on businesses during the Covid-19 crisis.

In a letter seen by FTAdviser, TPR has asked pension providers to not report any employers who are 90 days late in paying their contributions under auto-enrolment regulations but instead wait for 150 days.

The regulator said it did not intend to issue any new unpaid contribution notices to employers, and asked providers “not to report any new payment failures”.

This is a temporary measure while the TPR adjusts its processes for issuing notices and figures out how best to support employers throughout this uncertain period caused by coronavirus.

The letter states: “To give employers extra time during this period we are asking [providers] to report at 150 days late instead of the 90 days set out in the code. 

“This will give you longer to work with employers to bring payments up to date, as well as extending the period to report to TPR and to members.”

But TPR has stressed it is not halting all enforcement activity in this area and employers still have a duty to make pension contributions to the scheme in a timely way. 

The regulator reiterated that providers are expected to continue with their normal monitoring of contributions and communicating with employers where payment failures occur. 

But for now they must only report to TPR any insolvencies, payment updates, fraud and refusal to pay and outstanding contributions of £100,000 or more.

The regulator will be publishing guidance on its updated enforcement approach for auto-enrolment once it has adjusted its processes. 

A spokesperson at TPR said: “In these unprecedented times, we are highly aware of the strain employers are under due to covid-19 and the impact this will have on their business, staff and resources. 

"Our focus is on supporting employers and savers at this challenging time. To help employers, we are working closely with pension providers and asking them to be as flexible as possible when agreeing payment plans so that some employers can pay AE contributions over a longer period if necessary.”

They added: “We expect employers to continue to meet their automatic enrolment duties towards their staff including paying the correct contributions across to the scheme on time. However, in order to lessen the burden on them, we are temporarily limiting some enforcement activity. 

“In the longer term, we expect any and all missed contributions to be made up in full so staff do not miss out, and have asked providers to continue reporting to us so we have accurate records.”

Kate Smith, head of pensions at Aegon, said: “It’s important to stress there is no change in the employer’s responsibility to pass on both their own and their employees’ contributions to the pension provider on time, as agreed. 

“Providers and trustees also remain responsible for monitoring and challenging late payments but for a temporary period during the crisis will have more time and discretion on how to resolve late payments issues.”