Auto Enrolment Duties Update

February 18th, 2016

Following the quarterly update from The Pensions Regulator, they have provided some information about a few cases and the powers they have used relating to automatic enrolment and associated employer duties. Below is an extract from their most recent article along with an example of their powers:

“Preventing non-compliance

This section highlights recent developments that employers or the industry should be aware if, as they can directly impact compliance with the employer duties.

Our approach to compliance and enforcement

Our research shows that most employers want to do the right thing by their staff but that smaller employers are more likely to leave things to the last minute. They therefore need a ‘nudge’ to encourage them to meet their duties, which is why this bulletin shows an increase in the number of compliance notices. A minority still don’t comply after receiving such a notice, but many do after receiving a fixed penalty of £400.

As we deal with smaller employers, it is expected there will be more who, despite the message to prepare early, leave it too late or don’t act at all. We take this very seriously, as it’s not fair if employees don’t receive the pension contributions from their employers that they’re legally due.

How our communications are shaping employer Compliance

Millions more people are now saving for their retirement thanks to automatic enrolment, and we are committed to ensuring it remains a success.

In 2016, up to half a million smaller employers will need to work out what their automatic enrolment duties are and whether they need to provide a pension for their staff. To do this, it’s important that they receive the information they need in an accessible format, using jargon-free language.

Case study

An employer in the sports sector is liable to pay a £10,000 fine because it repeatedly failed to engage with us or put things right.

After failing to complete a declaration of compliance and informing us they hadn’t even started automatic enrolment, we issued them with a compliance notice requiring them to pay the arrears of their own and the staff contributions. These contributions were payable from their staging date, which was in 2014. They failed to comply within the 60 day deadline, so they were then given a £400 fine and a further 28 days to comply.

The employer informed us that they had engaged an independent financial adviser to help them deal with automatic enrolment; however they subsequently failed to inform us of any action being taken to put things right. Because they repeatedly failed to provide evidence of

compliance, we issued them with an escalating penalty notice. This gave them 28 days to comply, after which the fine would increase to £2,500 per day. (The daily accrual rate of escalating penalty notices is determined by the number of employees in the PAYE scheme.)

Eventually the adviser contacted us and within four days a scheme had been chosen and put the relevant staff into it. By then the daily penalty had amounted to £10,000. These fines, along with having to pay staff contributions of approximately £15,000, could have been avoided had the employer complied on time”

Please click here to see the full PDF article.