Advisers fear the first four escalating fines issued to employers by The Pensions Regulator are the tip of the iceberg as more than a million of the UK’s smallest firms prepare to auto-enrol staff for the first time.
The regulator’s latest quarterly compliance bulletin shows it sent £400 fixed penalty notices to 198 employers in the first quarter of thisyear, compared with 166 in the last quarter of 2014 and just three firms before that.
In addition, TPR issued its first four escalating penalties. These are handed out for more serious failure to comply with statutory notices and can range between £50 and £10,000 a day depending on the size of the company. TPR would not say what levels of fines have been issued.
Rowley Turton director Scott Gallacher says: “It’s only going to get worse. They have so far been the bigger companies and have professional advisers and some budget to manage the business.
“You’ve got to go some way before you get to the daily fines. If the system’s creaking already, I think it’s going to end terribly for the likes of the chip shop owner. Now we’re at the 10- to 15-employee firms we’re starting to get the first resistance on paying fees.”
Syndaxi Chartered Financial Planners managing director Rob Reid says: “The gloves are off. This is only going to go in one direction. This is the pensions equivalent of speeding fines. It’s a great money spinner for the regulator.
“The problem is that if you fine too much and you put people out of business you don’t actually solve the problem, you’ve created another one. You don’t always encourage compliance by throwing fines at people.”
The number of firms falling foul of the regulator is expected to increase as smaller employers reach their staging dates.
At least one million of the smallest employers will have to comply over the next three years.
To date the regulator has used its powers – which include inspections, compliance notices and fines – on 1,962 occasions.