The total number of employers fined for failing to comply with their workplace pensions duties reached 169 by the end of 2014, according to figures from The Pensions Regulator (TPR).
However, this figure represents a small number compared to the tens of thousands of businesses which have now complied with their auto-enrolment duties.
TPR also found:
- The number of employers approaching the date when they must confirm that they have complied with new workplace pensions duties (known as a declaration of compliance) is now beginning to rise significantly.
- Approximately 30,000 medium-sized employers which staged between April and July 2014 reached their deadline to complete their declaration of compliance by the start of December 2014.
- 166 fixed penalty notices (£400 fines) were issued in the last three months of the year.
- 1,139 compliance notices, which instruct employers to remedy a contravention of one or more of their employer duties or risk a fine or further action from the regulator, were issued.
Charles Counsell, director of automatic-enrolment at The Pensions Regulator, said: “Failing to declare within five months of [their] staging date means employers risk being fined, which is why we recommend [they] start auto-enrolment planning and preparation 12 months before staging.
“It appears some medium employers waited for a prompt from the regulator before completing their auto-enrolment duties.
“Employers must complete all their duties including making their declaration of compliance to The Pensions Regulator.
“With the mass market roll out of auto-enrolment to large numbers of small businesses in the coming months, we expect to see an increase in how often we need to use our powers.
“The vast majority of employers complete their duties on or ahead of time, but we are seeing a small minority that require the additional nudge of a notice from The Pensions Regulator.”
The message from the Pension Regulator is loud and clear. Not complying is not an option. The crackdown is crucial to the continued success of auto-enrolment. Those employers left to stage should sit up and take notice; the Pension Regulator is prepared to use the stick as well as the carrot to ensure compliance.
Contrasting with three penalty notices in the earlier months of 2014, the Regulator issued 166 employers with fines in the last three months of the 2014. This is unsurprising and certainly backs up our belief that smaller companies are finding auto-enrolment more difficult to deal with than the big companies with larger resources who made the task seem easy. The sharp increase in the number of fines being issued at a time when the Regulator is writing to over 1 million small companies is no coincidence. Without having the luxury of large HR, Payroll and Finance departments that larger employers benefit from, it seems logical that we will see the number of fines increasing at a greater rate as the months go by.
There is help out there, but the question is, where will these employers turn for help? Do accountants and other professional advisers have in place trusted relationships with auto-enrolment service providers who can help employers? The Pensions Regulator has made their stance very clear, non-compliance is simply not an option!
The rate of increase in auto-enrolment non-compliance is a concern. The Pensions Regulator is clearly taking a harder line with employers who fail to complete all the technicalities of auto-enrolment on time, which highlights the need for small and medium sized employers to face this challenge early and get the right support to comply fully, especially if they are already behind the ideal timetable. The continued success of auto-enrolment is important for the retirement health of the UK workforce, but it can be a complicated process. We applaud the Regulator’s attempts to encourage compliance and recognise the need for fines as a last resort. Employers who make a genuine effort to do the right thing should not face fines for minor non-compliance.