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The Pensions Regulator: Fears of mass auto-enrol non-compliance unfounded

Charles Counsell 700 x 450

As we approach the 4 million milestone for automatic enrolment, I am delighted that 99 per cent of employers have successfully enrolled their workers without the need for us to use our powers. There is real evidence that employers understand the “we’re all in” message and want to do the best for their staff.

We realise most of the hard work is still ahead of us – we will keep adapting our communications in response to changing needs and trends. One of the keys of our success so far has been gauging the mood, awareness and understanding of our audience –  the tens of thousands of employers due to meet their duties in the coming months and years. 

I am aware there have been concerns expressed by some pension providers that the number of employers approaching them who staged from April to July does not tally with the numbers expected to complete a declaration of compliance (registration) in the late summer/early autumn. 

Some have said this is evidence of non compliance. Our research however shows the opposite is true – in fact 92 per cent of those expected to complete a declaration of compliance (registration) in the coming months are well on their way to meeting their duties. 

From previous experience, we believe the majority of the remaining 8 per cent will catch up and will also meet their deadlines. That said, there will no doubt be some employers who will leave it to the last minute. We urge them not to do this – it could prove costly and if they fail to comply we will use our powers.     

So why are fewer employers approaching providers than they had expected? We have evidence that many employers are not shopping around but instead choosing to stick with their existing scheme. Many are public sector organisations using public sector schemes and, of course, some employers are choosing to use the flexibility to postpone automatic enrolment by up to three months.

For medium employers, the signs are good. We expect to see that the vast majority will comply on time and this means over a million more workers newly saving for their retirement. Looking ahead, we are turning our focus to the needs of small employers.

We have said that wilful or persistent non-compliance will be met with enforcement action and penalties. Our experienced team of investigators monitor signs of non-compliance and respond accordingly. We have intelligence-led proactive compliance drives and continually examine incoming evidence across different types of business sectors.

Our compliance and enforcement work is vital to the success of automatic enrolment but our communications work is equally important. At this stage in the journey, our emphasis is still very much on education. We are focused on getting our messages out there – telling small employers what they will need to do and how to do it. 

For the first time, we are using national and regional radio advertising to deliver our messages to new audiences, alongside ongoing printed press and online advertising. The message remains simple – if you are an employer, you will have automatic enrolment duties.

Charles Counsell is executive director for automatic enrolment at The Pensions Regulator


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There are 3 comments at the moment, we would love to hear your opinion too.

  1. Maybe the providers have been bemoaning the fact that employers are also not prepared to be shoe-horned into costly GPPs (which are profitable for both the provider and the adviser), when they could comply and provide a suitable scheme via NEST, at potentially no cost to themselves. When the smaller businesses stage, this will undoubtedly become the norm. It’s strange that, pre-auto-enrolment, you struggled to place a small GPP because they were not profitable from the provider’s perspective, and suddenly, there are those that will accept any size of scheme.

    From my experience, there are a lot of scare-mongering ‘sales pitches’ being prepared, and promoted to direct employers along the GPP route.

    The fact that auto-enrolment is a non-authorised activity is unbelievable, and leaves this major initiative open to abuse from those who see it as an opportunity to make quick profits, at the expense of employers generally.

  2. What seems to be amiss is the fact that the majority of firms who have already put in place their AE pension are the big organisations that were already offering a pension scheme so they only had to make a few tweaks here and there.

    Over the next 2 years the majority of companies who will be having their staging date don’t offer or promote a pension scheme at all for their staff so this will be a steep learning curve and one they can’t afford to get wrong.

    In my opinion I think a lot of the smaller firms will ignore it without realising the implications until it is too late. There are also firms out there struggling to stay afloat who potentially can’t afford an increase in their payroll, let alone the staff having any spare money to pay in.

    The next 2 years I think will be absolute carnage as the insurance companies won’t be able to cope with the demand, which is why some insurers are increasing their requirements to avoid the smaller firms that won’t generate enough revenue.

    In my opinion most employers should at least consider the likes of NOW Pensions or The Peoples Pension as these tick all of the boxes to ensure the employer meets all of the requirements. If an employer wants to offer something a bit more bespoke for a few staff members then do this in addition to the aforementioned. The biggest fear for any employer is ensuring they meet the requirements set by TPR to avoid any kind of enforcement – especially when you consider TPR issued almost 600 enforcement letters in the first 12 months of AE – and these are the companies with big in-house pension departments and they even got it wrong!

    Advisers need to concern themselves more with providing a simple solution rather than trying to offer a solution that may well have too many options and features that might not be needed.

  3. “So why are fewer employers approaching providers than they had expected? We have evidence that many employers are not shopping around but instead choosing to stick with their existing scheme. Many are public sector organisations using public sector schemes and, of course, some employers are choosing to use the flexibility to postpone automatic enrolment by up to three months.”

    The latter part of the statement troubles me – particularly coming from TPR. Postponement DOES NOT alter your staging date or your statutory duty to have a scheme in place for those who wish to join prior to the employers ‘postponed’ date. Very recently Steve Webb said something similar – this does not help those of us banging the drum with smaller employers regards their need to A) take AE seriously & B) plan well in advance.

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