Employers warned not to ignore automatic enrolment penalty notices

28 April 2016

More than 95% of the first small employers required to put their staff into a workplace pension have now complied with the law, showing that automatic enrolment is successful for all sizes of employer.

However, although compliance rates remain high, The Pensions Regulator's (TPR) latest quarterly compliance and enforcement bulletin shows that the number of Escalating Penalty Notices it issues is on the rise. Employers who fail to heed 28-day warning notices risk a fine which increases each day.

An Escalating Penalty Notice (EPN) is one of the statutory powers TPR has to help maximise employer compliance with automatic enrolment duties. It specifies the date by which the employer must comply with certain actions or be subject to a fine which builds up at a daily rate.

The fine for small employers with 1 to 4 staff who fail to comply with an EPN is £50 per day and for those with5 to 49 it is £500 per day.

Minister for Pensions, Baroness Ros Altmann, said:

“Automatic enrolment is delivering fundamental change to workplace pension saving. So far over 100,000 employers have enrolled over 6 million workers. Levels of compliance amongst employers has been consistently high and I am pleased with all the steps The Pensions Regulator has put in place to support the huge number of smaller employers who have recently begun to undertake their duties.

“The aim of automatic enrolment is to get all employers setting up pension schemes for their staff. It is most encouraging to see that even the smaller employers are managing to do this, and the proportion facing enforcement action has stayed remarkably low.”

Charles Counsell, Executive Director for automatic enrolment, said:

“Most employers comply on time and we continue to see compliance rates in the high nineties. Others need a nudge and are prompted to meet their duties when one of our notices comes through their letterbox.

It’s simply not fair for staff not to receive the pension contributions they are legally due. But failing to act also means an employer risks clocking up a significant penalty until they put things right.

Our message remains that if things aren’t going well, then talk to us; don’t ignore us.”

TPR’s press release shows headline figures from the compliance report:

• 3,057 Compliance Notices issued, bringing total issued to date to 7,834.
• 806 Fixed Penalty Notices issued in first three months of 2016, bringing total issued since 2012 to 2,234.
• 96 Escalating Penalty Notices issued this quarter, bringing total issued to 127.