What are the consequences of auto-enrolment non-compliance?

06 May 2022

The Pensions Regulator has used enforcement powers in over 500,000 cases in the last decade as a result of employers failing to comply with auto-enrolment legislation.

When an employer fails to meet their legal duties with regards to pensions administration, the Pensions Regulator will send a warning letter with instructions and a deadline for those duties to be met. If action is not taken, a statutory notice is sent out advising of unpaid contributions and possible interest due. If the breach continues, a penalty notice will follow.

There are three types of penalty notices that pensions regulator may send out. A fixed penalty notice of £400 may be issued for failure to comply with a statutory notice or a breach of the law. This is followed by an escalating penalty notice. This fine increases every day at a rate of £50 to £10,000 per day, depending on the number of staff the organisation employs. The third type is a prohibited recruitment conduct penalty notice, failure to comply with which leads to a fine of £1,000 to £5,000.

Auto-enrolment compliance is a complex area of UK payroll. The CIPP provides an in-depth training course highlighting and explaining obligations of employers. 

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