Are the wheels starting to fall off the auto-enrolment train just as it forces its way up its first big peak? That may be going too far, but worrying signs of civil disobedience are starting to emerge. Evidence is growing of employers breaching the law on auto-enrolment, in some cases wilfully.
When the likes of Nest chief executive Tim Jones, Aviva and Standard Life tell you a significant number of the April stagers seem to have gone AWOL, we can be fairly confident they are in breach.
Yes, many will be postponing, but it is simply not realistic to think that they have all written to employees telling them they have postponed, or have established a qualifying scheme for anyone who wants to opt in. These employers are in breach of the law, plain and simple.
Arguably more alarming than the emerging evidence of companies staging late is feedback from some advisers of those employers that are deliberately not complying, in a rerun of the last major rollout of pension schemes. “I didn’t bother complying with stakeholder, so I’m not going to bother with auto-enrolment,” is what advisers tell me some have been saying.
They will have a point. Last time about 70,000 of the 350,000 businesses with five or more employees required to set up a stakeholder pension scheme did not bother to do so. Only one employer was fined for this, and that was because its staff complained.
Most SME stakeholders ended up empty shells – this time around employees are expecting to be enrolled But the longer we go without anyone being penalised for breaches, the more the timetable is going to slip.
We all expected there would be some stragglers that would need cajoling to get over the finishing line on time. What is more surprising is that The Pensions Regulator has not yet issued a fine, despite the fact that there have already been some significant breaches of the law.
Last March, Corporate Adviser reported on an employer with more than 4,000 staff that was 10 months late enrolling part of its workforce.
If HMRC can fine an individual like me £100 for being a day late filing my self-assessment tax return, then surely it can issue a fine to an employer of that size that has breached the rules, without being perceived as heavy-handed.
TPR wants to be seen as a regulator that will guide where firms are trying to do the right thing rather than adopt a more punitive persona. I was trying to do the right thing when I filed my tax return two days late but since being fined I won’t be late again.
When Dunelm missed deadlines and payments but escaped a fine, the rumours were that TPR was looking for ‘the right case’. We are still waiting, so in the absence of a Lester Piggott-style crucifixion, the odd slap on the wrists would help.
Privately, pension advisers and providers are desperate for someone to get fined because they know it will make their life a lot easier. There is nothing to stop TPR pitching a fine at such a low level that the employer would not consider challenging it. But the message it would send out would be significant.
I hope the reason for TPR’s failure to act sooner is not a lack of resource. If the April stagers get away without penalties, however slight their breaches of the law, we can expect greater disobedience as the rollout continues. Its time to get tougher.
John Greenwood is editor of Corporate Adviser