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Employers continue to meet pension duties despite COVID-19 challenges

Ref: PN20-23

Issued: Thursday 27 August 2020

  • New report shows how TPR flexibilities have supported businesses

Employers are being reminded that while COVID-19 has changed the workplace, it has not changed their automatic enrolment responsibilities towards their staff.

New data published today highlights how The Pensions Regulator has supported employers through the upheaval caused by the pandemic.

TPR’s quarterly compliance and enforcement bulletin shows how temporary flexibilities led to a 55% fall in the use of powers between April and June this year compared to the previous quarter. 

Nevertheless, despite the challenges of the pandemic, TPR has not seen a significant or unusual spike in missed pension contributions to date and the vast majority of employers are meeting their automatic enrolment duties, including completing their declaration of compliance and re-enrolment responsibilities.

TPR introduced flexibilities to help employers navigate the challenges of COVID-19, taking a pragmatic approach to enforcement in light of cash flow issues for employers and to reduce the burden on administrators in the early days of the crisis. 

Steps included giving employers who may be struggling more time to work with their provider to bring missing pensions contributions up to date, before taking enforcement action.

However, TPR has remained clear that employers continue to have pension duties and is closely monitoring compliance, taking action where necessary.  It has continued to target employers who have committed serious breaches, and where staff contributions have been at immediate risk. As COVID-19 easements begin to be lifted, TPR is also now returning to normal levels of enforcement activity.    

The publication of the bulletin comes as TPR launches a new advertising campaign reminding employers that while their workplace has changed due to COVID-19, their pensions duties towards their staff remain the same.

Mel Charles, Director of Automatic Enrolment at TPR, said: “In the early months of the pandemic, we recognised the challenges facing employers and took swift and decisive action to support them through the crisis.

“We gave employers more time to work with their pension provider to ensure pensions contributions continued to be made and, in line with our risk based proportionate approach, we took enforcement decisions in light of pressures on businesses caused by COVID-19.

“However, protecting savers remains at the heart of what we do and we are reminding employers of their legal duties so that staff receive the pensions they are due.

“While our flexibilities have supported employers through unprecedented times, we have kept a close eye on compliance.  Early indications are that the vast majority of employers have successfully met their duties, however we will take appropriate action, including financial penalties, where employers fail to act.

“The success of automatic enrolment has been hard won with commitment from government, the industry and most of all, 1.7 million employers who have been doing the right thing for their staff and putting them into a pension.  It is now vital that we guard that success so that millions of people can continue to save now and in the future.”

The bulletin also shows the number of mandatory penalties for missing or incomplete chair’s statements fell from 52 between January and March to three this quarter.  This reflects temporary measures introduced to ease the burden on trustees, giving them more time to focus on immediate risks to the scheme at the start of the pandemic.  This included pausing enforcement in respect of missing or incomplete chair’s statements. 

Nicola Parish, Executive Director of Frontline Regulation at TPR, said: “The pandemic has been a difficult time for everyone, including trustees.  At the start of the pandemic we acted quickly to temporarily pause certain types of enforcement against trustees to ensure they could focus on addressing the most critical risks to schemes. 

“We promptly issued COVID guidance to trustees to support them as they are the first line of defence for savers. Throughout the pandemic, our supervision teams have continued to work closely with trustees and employers to ensure high standards are being maintained and savers have remained protected.”

The bulletin shows:

  • The number of times TPR used its powers for automatic enrolment breaches was 15,733 this quarter compared to 35,174 between January and March
  • The number of Fixed Penalty Notices issued was 1,555, which is six times fewer than last quarter and the number of Escalating Penalty Notices issued was 625 which is five times fewer.
  • The total number of statutory powers used for scheme governance breaches decreased from 167 last quarter to 97 this quarter.  This is primarily due to the decrease in the number of penalties for missing or incomplete chair’s statements. 

Ends

Notes to editors

  • As well as responding to alerts from pensions schemes, in many cases, enforcement action has been triggered by whistleblowers.  Often, a warning of steep financial penalties has been enough to ensure compliance.  In one example, TPR followed up report that a major global restaurant operator had not paid across £45,000 in missing staff contributions for its UK business. The payment has now been made and contributions now remain ongoing.  In another example, TPR followed up a whistleblower report that contributions were not being made by a scaffolding firm amounting to £90k for 100 savers, and as a result of us making contact, the firm has now committed to making up the shortfall with their pension provider.
  • The increase in Compliance Notices issued during the quarter compared to the last quarter reflects an 18% increase in the number of employers who reached their declaration, re-declaration or second re-declaration deadline between March and May 2020 compared to those who reached their deadline between December 2019 and February 2020.
  • The Pensions Regulator is the regulator of work-based pension schemes in the UK. Our statutory objectives are: to protect members’ benefits; to 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

Media Officer (AE)
pressoffice@tpr.gov.uk
01273 662018

Matt Adams

Media Relations Manager
pressoffice@tpr.gov.uk
01273 662086

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