The Pensions Regulator recently announced that it had opened 89 cases of possible automatic enrolment non-compliance. What’s notable about this isn’t the number of cases that TPR is investigating; it is that they relate to employers who staged between July 2012 and March 2013.
In other words, these 89 cases involve the biggest employers in the country – companies which are likely to provide comprehensive benefits packages and to have large payroll and HR departments, with access to financial and legal advice.
If big employers can not get it right, what hope do smaller employers have?
What is unfortunate is that, in our experience, some smaller employers are not taking their automatic enrolment duties seriously. A frequent reason given for not preparing early is companies saying as their automatic enrolment staging date is not until after the next election and a new Government will ‘change the rules’ or will ‘exempt employers with less than five people’.
Even employers who realise that the founding principles of automatic enrolment have cross-party political support, and that they are highly unlikely to change, seem to think that they will never get caught. Some might be looking for ways to ‘get around’ their duties.
We have already heard strange stories, spoken in hushed tones, about using postponement and getting the workforce on two month rolling contracts; or making everyone self-employed. In the extreme, one employer initially insisted he did not believe in pensions; would wilfully fail to comply; and would rather go to jail than set up a pension scheme for his staff. However, after talking to his adviser, he did eventually resign himself to setting up a pension scheme!
The message needs to be loud and clear. There are political, social and economic imperatives that are driving automatic enrolment and any attempt to get around the rules will simply not be tolerated. The regulator and the DWP are likely to be quite busy over the next few years – helping employers comply; investigating possible breaches; closing loopholes; and making an example of employers who consistently fail to comply.
It is unfortunate that some employers might not take automatic enrolment seriously until they see a headline in the popular press that an employer has been fined or even jailed. The reality is that this will probably happen. And by then it may well be too late to get the help and support that they need.
If the 89 cases that the regulator has looked at tell us anything, it is that employers will need help to get ready as early as possible to make sure that they will be fully compliant for their new employer duties.
If employers still do not think it is going to happen, or think that there are ways to shirk their responsibilities, then pointing them towards the regulator’s report on Compliance and Enforcement policy might be a good place to start. They’re both available on the regulator’s website – www.tpr.gov.uk.
Jamie Clark is business development manager at Scottish Life