The Pensions Regulator (TPR) has announced an increase in the number of times that they have exercised their enforcement powers against employers. The announcement follows the release of the latest figures on automatic enrolment compliance and enforcement.
October’s quarterly report sets out the selected enforcement powers used in the period of 1 July to 30 September 2014 (click here to access TPR’s report). Most notably, the number of Compliance Notices issued (to remedy a contravention of one or more automatic enrolment employer duties) has increased from three (in the period up to 30 June 2014) to 163 (in the period up to 30 September 2014).
In addition, TPR also issued three fixed-penalty notices, which carry a fine of £400 each, for failure to comply with automatic enrolment duties. Significantly, this is the first use of fines relating to automatic enrolment.
The latest report also provides specific examples of non-compliance and highlights the common misunderstandings by employers about their duties. These include confusion over self-employment, postponement, opting in and out and the ongoing need to reassess eligibility.
As the number of employers staging significantly increases, TPR expects a surge in the frequency with which these powers are used. Referring to its own research, also released last week, TPR acknowledges that medium, small and micro employers are more likely to leave automatic enrolment preparations until closer to their staging date. However, TPR concludes that this is likely to lead to more examples of non-compliance with an employer’s duties.
TPR’s research shows that smaller medium employers (i.e. those with the most imminent staging dates) tended to be the most prepared for the changes: 88% reported having at least started preparation. In contrast, those employers staging between June 2015 and November 2015 and those staging between January 2016 and November 2016 were less likely to be prepared. In some cases, small and micro employers reported that they did not know when they needed to comply with automatic enrolment.
TPR recommends that employers prepare well in advance for auto enrolment and warn that they will take action against employers who fail to put pension arrangements into place for their workers.