Not an option – it’s the law

12 February 2018

This article was featured in the March 2018 issue of the magazine.

Darren Ryder, director of automatic enrolment at The Pensions Regulator, reminds employers of their duties and the penalties for non-compliance

Every employer has automatic enrolment duties. All employers need to:

  • assess their staff and enrol them into a workplace pension scheme if they meet certain criteria

  • write to them to tell them what they’ve done

  • maintain a payment of pension contributions into their pension scheme, and 

  • complete and submit a declaration of compliance to The Pensions Regulator. 

However, an employer’s workplace pension duties are not just a one-off, they are ongoing and it’s important that employers make sure that they continue to comply with their duties to avoid enforcement action being taken.


Spot checks

Over the past year, our teams at The Pensions Regulator have visited more than a thousand employers across the UK to make sure that pension duties are being complied with. We have already conducted checks on employers in several cities including among others London, Manchester, Sheffield, Glasgow. And, throughout 2018, we’ll be doing many more.

The checks help us to understand whether employers are facing any unnecessary challenges that we can help them with, such as assisting them to improve their systems. But they will also shine a light on those employers that have not taken the required steps to become compliant – as well as those that initially became compliant but then failed to keep doing what they should. So, it’s important that if you have clients you make sure they are aware that their automatic enrolment duties are ongoing and not just a one-off task at the point that their duties start.

To date, action has been taken against a few employers – fewer than one in every 1,000 that have gone through automatic enrolment – because they have failed to maintain staff pension contributions.


Ticking the box

Some employers might think that ticking the box on their declaration of compliance to say they have done everything that they should (even when they haven’t) will suffice. However, it’s important they know that being dishonest on the declaration is a criminal offence and one that we consider prosecuting employers for.

If employers fail to comply with their duties, we may issue them with a £400 fine, which is an unnecessary expense for any employer. If no action is taken as a result, we may then follow up with an escalating fine that increases by at least £50 a day for even the tiniest of micro-employers. If the fine is left unpaid, we may then take employers to court to get a county court judgment for their business. In the most serious cases we could even prosecute for failing to comply with the law. And after all the fines, the stress and the legal bills, employers will still have to become compliant and pay the contributions that should have been paid originally. It’s just not worth the risk and so you should make sure that your clients know what they need to do in order to get things right first time around.


 ...being dishonest on the declaration is a criminal offence...


Head in the sand

Automatic enrolment is not an option for employers, it’s the law. It’s vital that employers check that they have done – and are continuing to do – everything they should to comply with the legal requirements. Ignoring automatic enrolment duties won’t make them go away – it simply gives us, and possibly the courts, the impression that employers have no intention of doing what they should.

You can help your clients by making sure they’re aware of what they need to do, and the possible consequences of not complying with their duties. 

Recently we had to prosecute Greater Manchester bus firm Stotts Tours (Oldham) for wilfully failing to comply with the law. Not only will the employer have to make up the pension contributions that it should have paid for its staff over more than a year, it will have penalty notices to pay for non-compliance and will also face the court giving it an extra fine and legal costs on sentencing. It’s an avoidable bill that no employer needs. 


If time’s running out?

If you know that your clients are running out of time until their compliance deadline, or you know they’ve run into problems afterwards, it’s important that you urge them to act. The Pensions Regulator has a huge amount of information and guidance available on its website to help both business advisers and employers. n 


Useful links

  • Automatic enrolment guide for business advisers:  

  • Late complying? What you should do: 

  • Declaring compliance:    

  • Your clients’ ongoing duties: