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Launch of business sector compliance visits

Ref: PN13-44
Tuesday 19 November 2013
Author: Media team

The Pensions Regulator has carried out the first in a series of in depth fact finding visits to business sectors that may face automatic enrolment compliance challenges.

The move marks the launch of a proactive drive towards different sectors and demonstrates how the regulator will use direct intervention to ensure employers comply with their statutory duties and help establish a pro compliance culture.

The regulator’s automatic enrolment compliance and enforcement team visited a number of recruitment employers where they were able to have an in-depth look at how these employers are implementing automatic enrolment.

The recruitment sector was identified through our intelligence work in line with the compliance and enforcement proportionality framework which is part of the automatic enrolment compliance and enforcement policy.

View the compliance and enforcement policy in strategy and policy.  

The recruitment sector faces significant compliance challenges and was particularly important to target because more than 1,000 recruitment employers are due to reach their staging date between April and July next year. The staging date is when an employer’s automatic enrolment duties are switched on.

The visits were made to prevent and tackle possible breaches, ensure compliance, learn lessons and share good practice among the industry. The regulator wants to reduce the likelihood of enforcement action by identifying and, where possible addressing problems early. As a result of information gathered from the visits, the regulator will be issuing compliance guidance tailored for the recruitment sector.

Executive director of automatic enrolment Charles Counsell said: "These visits were very positive and employers were willing to engage with us and tell us about their experiences. Engaging directly in this way helps us to get a good understanding of the issues faced by this sector and use what we learn to help others in the industry.

"Over the coming months we will be carrying out more visits to employers in other sectors where we have identified potential compliance challenges. We want to ensure any problems they face are addressed in good time and that they do not run the risk of non compliance - which can come at a cost."

Recruitment and employment confederation (REC) head of policy Kate Shoesmith added: "Recruiters want to be compliant and the REC is pleased that The Pensions Regulator recognises the additional barriers that recruiters face and is working with the industry to address these issues.

"The process does not lend itself easily to an atypical workforce and recruiters have had to work hard to ensure that their businesses are ready for automatic enrolment.

"Over the last 12 months, many recruiters have successfully dealt with the challenges that the industry has faced and we will continue to work with the regulator to ensure that the remaining recruiters who are yet to reach their staging date are supported through the process."

The regulator is urging the industry to make sure their chosen pension scheme and software provider can meet their needs. Employers must start communicating with providers in good time and test payroll systems ensuring they allow enough time, before their staging date to address any complications. Employers must also plan how they will best communicate with workers and leave plenty time to accurately assess their workforce.

The Pensions Regulator recommends that employers should have providers and advisers in place at least six months before their staging date. The staging date is the date when an employer’s automatic enrolment duty is switched on.

The first step is for employers to check their staging date by using our automatic enrolment timeline planner. Employers can then use our handy timeline planner to create their own individual plan. The regulator recommends employers do this as soon as possible and start preparing for automatic enrolment between 12 to 18 months before their staging date.

To view the timeline planner go to create your plan for automatic enrolment.

The framework for proactive exercises is set out in the automatic enrolment compliance and enforcement strategy. In line with the strategy, The Pensions Regulator deters, prevents, detects and tackles potential non compliance, establishing and maintaining a pro compliance culture.

View the compliance and enforcement strategy in strategy and policy.

Editor's notes

  • Next year, tens of thousands of employers will reach their staging date. Eventually up to 1.3 million employers will have automatically enrolled around 11 million eligible workers into a work-based pension scheme.
  • The Pensions Regulator is the regulator of work-based pension schemes in the UK. We have objectives to: protect members’ benefits; reduce the risk of calls on the Pension Protection Fund (PPF); and to promote, and to improve understanding of, the good administration of work-based pension schemes.
  • In the 2008 Pensions Act, and corresponding Northern Ireland legislation, The Pensions Regulator was given a new statutory objective to maximise compliance with employer duties (including the requirement to automatically enrol eligible employees into a qualifying pension provision and pay a minimum contribution), with certain employment safeguards.
  • Beginning in October 2012, employers will be required to automatically enrol all their eligible jobholders into a qualifying pension scheme and make a minimum contribution of a jobholder's qualifying earnings into the scheme (this contribution will be increased in phases).
  • An eligible jobholder who is between age 22 and state pension age earning over £9,440 (in 2013/14 terms and this figure is reviewed every year), must be automatically enrolled in a qualifying scheme by the employer. Qualifying schemes are pension schemes that satisfy the minimum criteria prescribed in the Pensions Act 2008. The criteria establish a minimum standard for the level of contributions made to the scheme or the level of benefit provided. Pensions schemes can either match or exceed the minimum standards.

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