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Surge in employer fines for auto-enrol non-compliance

The Pensions Regulator issued 166 penalty notices to firms breaking auto-enrolment regulations in the final quarter of 2014, an increase from just three fines in the previous quarter. 

TPR’s latest quarterly update on its investigations into auto-enrolment reveals it served 166 firms with £400 fixed penalties for failing to comply with an unpaid contributions notice or a compliance notice in the last three months of the year. 

The fines totalled £66,400 and compare to three penalties in the third quarter of 2014 – the first TPR had issued for auto-enrolment non-compliance.

There was also a surge in the number of compliance notices issued, with TPR handing out 1,139 in the final quarter of the year, compared to 163 in the third quarter.

Approximately 30,000 medium-sized employers who had staging dates between April and July reached their deadline to complete their declaration of compliance by the start of December 2014.

TPR director of auto-enrolment Charles Counsell says: “My message to all employers is that failing to declare within five months of your staging date means you risk being fined, which is why we recommend you start your auto-enrolment planning and preparation 12 months before staging.
“It appears some medium employers waited for a prompt from the regulator before completing their auto-enrolment duties.”

TPR says that with auto-enrolment being rolled out to large numbers of small businesses in the coming months, it expects to see a further increase in the number of firms which leave it too late or do not comply with the rules.


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There are 11 comments at the moment, we would love to hear your opinion too.

  1. The tip of the iceberg methinks .

  2. Rt Hon Sir Arthur Streeb-Greebling 28th January 2015 at 12:06 pm

    Interesting. But lacking in detail. How does TPR know who has and hasn’t complied. Employer compliance is normally done by HMRC which has teams to enforce PAYE, status and so on. That regime doesn’t cover Auto Enrolment.

  3. You ain’t seen nothing yet! Some of the little guys have their staging date in June so by late Autumn expect a tsunami. All good stuff – after all where do the fines go – to our dear Government of course – so basically it’s tax revenue. What a surprise!

  4. If they don’t do it and the fine goes to the treasury, what happens about the money owed to the employee who hasn’t been auto enrolled when they should have been? Surely there is some kind of debt owed to the employee from staging date to actual date of implementation of the scheme?

  5. What I struggle with is how staging dates are allocated. I thought it was size of company and numbers of employees… I have a Company with 1 employee (the Director) whose staging date is August 2015 and another with 25 employees whose staging date is August 2017…

    Note I am not providing advice on Auto-Enrolment I am passing on that work elsewhere…

  6. Phil the fine is in addition to having to pay any outstanding employer and employee contributions to a suitable plan back to when the scheme should have commenced. Note the firm has to pay the employee payments as well

  7. @Rt Honorable
    tPR has feeds from the HMRC to help identify non-compliance; they know how many employees a company will have, the earnings for each employee and so the pension contribution required.
    They also know whether the company has registered with tPR for auto enrolment.

    So bring the two sets of data together (and other data from pension providers on late payment) and you have a full picture.

  8. @Dazzlin thanks for that I didn’t know that bit. It makes sense now. If ER has to pay BOTH missed ER & EE payts, then they are MAD if they miss their staging date as it could be doubling the expense.

    None of my clients are anywhere near their staging dates and the existing GPPs we were planning on moving to auto enrol early, we have kept putting back due to the changing nature of the rules and lack of clarity like the bit Dazzlin has clarified for me.

  9. This article only deals with the £400 fixed penalty for non-compliance there are also escalating fines which are truly terrifying – see below:

    Escalating Penalty Notice (EPN)

    EPNs may be issued under S.41 2008 act when there has been a failure to comply with the statutory notice. The regulations may issue escalating penalties at a prescribed daily rate, ranging between £50 – £10,000 (depending on the number of persons the employer has). If the employer fails to pay a financial penalty and remedy the breach, in certain circumstances the regulator may consider further action in relation to wilful non-compliance which may ultimately lead to prosecution.

    Number of persons Prescribed Daily Rate(£)
    1-4 50
    5-49 500
    50-249 2500
    250-499 5000
    500 or more 10,000

  10. And yes you are reading right PER A DAY!

  11. There is a danger that applying such punitive fines will provide unscrupulous employers the excuse to get rid of staff. A difficult one whereby employment law is forcing employers to pay for something they might not be able to afford, so many will lie low and hope it goes away.

    Having said that, it is a price worth paying if there are significant numbers better off as a result of Auto Enrolment.

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