It was only a matter of time before The Pensions Regulator (TPR) started to issue escalating penalty notices, and that time has come. In its latest compliance and enforcement bulletin1, it lays out the powers it has used so far:
These figures should come as no surprise to anyone in the corporate market and there is no doubt that they will continue to increase, quarter by quarter.
What’s especially useful about looking through these bulletins though is that they give an indication of where employers are tripping up and where they might need help. The bulletin identifies, for example, that lots of small employers (and by that we mean fewer than 50 workers) are aware that they have to do something and are getting advice. But many of these employers are approaching their accountant or bookkeeper for advice, and unfortunately it’s those two groups who have the lowest auto-enrolment awareness level among intermediaries.
According to TPR, employers are failing to understand that they have to give information to people who won’t be auto-enrolled and let them join if they want. Backing this up, TPR cites a case where an employer assumed they didn’t have any duties because their workers are all low paid. In another case, they talk about another employer who thought the pension scheme would calculate and deduct all the contributions for them.
It’s clear then that while many employers are complying with their duties, there are some who are struggling. And with more than 1.3 million more employers due to stage over the next three years1, that means a lot more will be struggling. Talks about the ‘capacity crunch’ have been going on for years, but it’s only in 2016 that the threat will really crystallise. The industry will of course create new solutions and TPR is bravely attempting to help smaller employers by proposing an auto-enrolment assessment system to work with the HMRC’s basic PAYE. But if the latest TPR bulletin is anything to go by, I predict they will also be beefing up their compliance and enforcement team to deal with a probable exponential increase in breaches.
1 ‘Auto Enrolment Compliance and Enforcement’ Quarterly Bulletin, 1 Jan–31 March 2015