Auto-enrolment: the penalties begin

The latest report from the Pensions Regulator (TPR) on pension auto-enrolment carries important warnings.

TPR issues quarterly reports on the progress of pension automatic enrolment.  These have generally been unexciting affairs until the latest edition, covering the final quarter of 2014. Suddenly, it seems that things are not running quite as smoothly.

In the last three months of 2014:

• TPR issued 1,139 compliance notices demanding that an employer “remedy a contravention” of at least one duty under the auto-enrolment provisions. From October 2012, when auto-enrolment started, to September 2014 the regulator had issued just 177 compliance notices.

• In response to those who ignored earlier compliance notices, TPR also sent out 166 Fixed Penalty Notices (£400 fines). In the previous two years it had issued just three such notices.

• Seven “Unpaid Contributions Notices” were sent to employers who had either paid pension contributions late or not paid them at all. Only one had been issued in the previous eight quarters. 

The sudden jump in non-compliance is almost certainly the result of the fact that the auto-enrolment process is now working its way down through the employer list to medium-sized employers. These do not have the human resources departments of their large counterparts, which were the early targets of auto-enrolment.

When issuing the latest data, TPR reiterated its advice that “we recommend you start your automatic enrolment planning and preparation 12 months before staging [auto-enrolment start date].” The regulator also emphasised that employers should not wait to be prompted before meeting their auto-enrolment responsibilities.

If you have not yet thought about how your business will plan for auto-enrolment, now is the time to do so.  Delay could be costly, not only in terms of fines, but also reputational damage and employee relationships.

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