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Compliance still the norm but small and micro employers warned of the risks

Ref: PN15-36
Thursday 30 July 2015

New figures published today by The Pensions Regulator show compliance with automatic enrolment law continues to be the norm.

But with tens of thousands of small and micro employers starting out on their automatic enrolment journey in the coming months, the regulator has warned of potential pitfalls to compliance.

The figures, published in the quarterly compliance and enforcement bulletin show where the regulator has used its powers between April and June this year. It is the last bulletin primarily representing medium sized businesses who have implemented automatic enrolment and illustrates that most employers in this group have complied without the need for the regulator to use its powers.

However, the bulletin also highlights lessons to be learned for small and micro employers. In particular it shows employers with seasonal and temporary staff must take care when assessing workers or postponing staff. These types of employers include recruitment businesses, construction firms, bars and restaurants, caterers and shop owners. These types of employers are reminded to ensure they assess all staff and if they choose to use postponement they must inform staff within six weeks of their staging date.

Minister for Pensions Baroness Ros Altmann said: “It is encouraging that the overwhelming majority of employers are continuing to fulfil their automatic enrolment duties but there is no room for complacency.

“The rollout of automatic enrolment to small and micro firms only began recently. I recognise they will face different pressures from larger companies and would like to encourage them to visit The Pensions Regulator’s website without delay to find out what they need to do.”

Executive director of automatic enrolment Charles Counsell said: “The number of times we have used our powers remains low compared to the tens of thousands of employers who have successfully met their duties. However as 1.8 million employers see their automatic enrolment duties switched on in the coming years we do expect to see a rise in the number of times we will need to use our powers.

“My message to small and micro employers is to ensure you leave enough time and be clear about what you will need to do to comply. We publish lessons learned to help employers avoid common pitfalls and all the information you need is on our website. We are here to help – but we will take action if an employer is wilfully non compliant.”

Key points in the bulletin

Between April and June this year the regulator issued:

  • 119 compliance notices
  • 50 unpaid contributions notices
  • 68 fixed penalty notices
  • 0 escalating penalty notices

The bulletin has been published at the same time as the regulator’s updated compliance and enforcement strategy and policy. The documents details the regulator’s approach to identifying, deterring, preventing and tackling non compliance and reflect lessons learned about the particular compliance challenges for small and micro employers.

Research shows that 20% of small and micro employers whose duties come into effect in the coming months do not know the exact date their duties start. Employers who are not clear about this, risk failing to comply on time and are sometimes unaware they will have to pay the pensions contributions missing because of the delay. The strategy and policy explain the circumstances where the regulator will require contributions to be backdated. This includes circumstances where the employer will be required to pay the workers contributions as well as their own.

Charles Counsell added: “The refreshed strategy and policy documents serve to educate employers and their advisers about the ways we will seek to get employers on track towards compliance and the types of powers that we have.”

Editor's notes

  1. The Pensions Regulator, which continues to take a risk based proportionate approach to its compliance and enforcement activity, regularly reviews its strategy and policy.
  2. Postponement is a flexibility which allows employers to postpone automatically enrolling their staff for three months. Employers who use postponement often have temporary and seasonal staff who they know will stop working for them after three months.
  3. 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); to promote, and to improve understanding of, the good administration of work-based pension schemes; to maximise employer compliance with automatic enrolment duties; and to minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of the regulator’s functions under Part 3 of the Pensions Act 2004 only).

Press contacts

Ciara Bridge-Butler 01273 648018
Rebecca Sandles 01273 811870
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