Business advisers urged to alert clients to start planning for automatic enrolment

06 February 2015

Business advisers have been urged to alert their employer clients to start planning for automatic enrolment in good time to avoid the risk of enforcement action.

The compliance and enforcement bulletin published recently by the Pensions Regulator shows that the total number of employers fined for failing to comply with their workplace pension’s duties reached more than 169 by the end of 2014.

The number of compliance notices also rose – with over 1,139 notices issued by the end of 2014. These notices instruct an employer to remedy a contravention of one or more of their employer duties or risk a fine or further action from the regulator.

While tens of thousands of businesses have complied with their automatic enrolment duties, the increase in enforcement action is primarily a result of some employers failing to heed the warning to start their plans in good time. Specifically, many instances of non compliance were due to employers not leaving ample time to complete their declaration of compliance.

Business advisers assisting clients with completing their declaration should ensure they leave sufficient time and ensure they have all the information they need to do this. Visit this link which details how advisers can help their clients complete this task.

The number of employers approaching the date when they must make their declaration of compliance is now beginning to rise significantly. In future months, the regulator expects to see an increase in the number of times it will need to take enforcement action – due both to sheer numbers and changes to the type of employer who are now reaching their staging date. Our research indicates small and micro employers are more likely to leave things to the last minute.

The Pensions Regulator’s director of automatic enrolment, Charles Counsell, said,

“It appears some medium employers waited for a prompt from the regulator before completing their automatic enrolment duties.

With the mass market roll out of automatic enrolment to large numbers of small businesses in the coming months, we expect to see an increase in how often we need to use our powers.

The vast majority of employers complete their duties on or ahead of time, but we are seeing a small minority that require the additional nudge such as a compliance/enforcement notice from The Pensions Regulator.”

The regulator’s own research shows that the majority of employers who have completed the automatic enrolment process regret not allowing more time.

As well as highlighting what employers and their advisers can do to avoid non-compliance, the latest compliance and enforcement bulletin details how the effective use of the regulator’s powers directly assists in ensuring workers receive the pensions they are due in law.

The bulletin published by the regulator includes details of how many times it has used its statutory powers.

You can view the bulletin research and analysis section of the regulator’s website.

Key points from the bulletin:

  • Approximately 30,000 medium sized employers, (those with approx 62 - 149 workers), who staged in April-July had reached their deadline to complete their declaration of compliance by the start of December 2014.
  • A total of 166 Fixed Penalty Notices (£400 fines) were issued in the last three months of the year.
  • A significant number of the notices issued in this period were to employers who had missed their deadline to submit their declaration.

All enforcement decisions are made in line with the regulator’s compliance and enforcement strategy.

Listed below are also some useful links.