Auto enrolment enforcement activity at The Pensions Regulator has dropped by 55 per cent in the past quarter after coronavirus led it to ease its approach.
TPR's latest compliance and enforcement quarterly bulletin, published yesterday (August 27), showed the regulator used its powers 15,733 times from April to June, compared with 35,174 times in the previous quarter.
It issued 1,555 fixed penalty notices in the second quarter of this year, six times fewer than in the last quarter, alongside 625 escalating penalty notices, which was five times fewer than in the first quarter.
A fixed penalty notice of £400 is the first stage in the enforcement process and is followed by an escalating penalty notice, which is issued where an employer has not complied with previous warnings and varies between £50 and £10,000 a day depending on the size of the company.
The total number of statutory powers used for scheme governance breaches decreased from 167 in Q1 to 97 in Q2, primarily due to the decrease in the number of penalties for missing or incomplete chair’s statements.
The drop was a result of flexibilities introduced by TPR in March to give employers who were struggling more time to work with their provider to bring missing pension contributions up to date, before taking enforcement action.
However, despite the challenges that Covid-19 introduced, the regulator said it had not seen a significant or unusual spike in missed pension contributions and the majority of employers continued to meet their auto-enrolment duties.
Mel Charles, director of automatic enrolment at TPR, said: “In the early months of the pandemic, we recognised the challenges facing employers and took swift and decisive action to support them through the crisis.
“We gave employers more time to work with their pension provider to ensure pensions contributions continued to be made and, in line with our risk based proportionate approach, we took enforcement decisions in light of pressures on businesses caused by Covid-19.
“However, protecting savers remains at the heart of what we do and we are reminding employers of their legal duties so that staff receive the pensions they are due."
He added: “While our flexibilities have supported employers through unprecedented times, we have kept a close eye on compliance. Early indications are that the vast majority of employers have successfully met their duties, however we will take appropriate action, including financial penalties, where employers fail to act.”
But as Covid-19 easements begin to be lifted, TPR has launched an advertising campaign reminding employers that while their workplace has changed due to Covid-19, their pensions duties towards their staff remain the same.
Source: TPR
Meanwhile, a report from the think tank Resolution Foundation, also published yesterday, warned one in 20 employees were not receiving the pension they are due, with low-paid, part-time workers particularly at risk of auto-enrolment non-compliance.
The think tank said TPR should go further with its enforcement and suggested it should focus on monitoring small businesses, contingent and low-paid workers, and sectors, where non-compliance was most prevalent.
It should also work closer with HM Revenue and Customs to receive data on employer pension contributions to help it crackdown on poor practice.
In response TPR said: “The Resolution Foundation’s report makes clear that 98.7 per cent of workers enrolled in a workplace pension are receiving the appropriate level of employer contributions.
“This means the vast majority of employers are successfully meeting their AE duties and are doing the right thing for their staff.
“For the small minority of employers who fail to comply with the law, we will use our statutory powers where appropriate, including issuing fixed and escalating penalty fines.
“Between 2019-2020, we issued 48,267 fines for failures to comply with AE duties.”
amy.austin@ft.com
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