Regulator Says SMEs Leaving It Late Is Not Acceptable
The announcement this week by The Pensions Regulator (TPR) that it has issued its first penalty notices for auto-enrolment non-compliance is the starkest warning yet for SMEs who have yet to prepare, says a leading pensions lawyer.
In TPR’s latest quarterly update, it said that it had issued 163 compliance notices and served three firms with £400 fixed penalties for failing to comply with an unpaid contributions notice or a compliance notice.
The number of compliance notices issued between July and September 2014 represented a significant increase compared to just 14 between the start of the auto-enrolment programme in October 2012 and July 2014.
Charles Counsell, TPR executive director for automatic enrolment, said: “As we deal with smaller employers, we will see more who, despite our message to prepare early, leave it too late or do not comply at all. This type of non-compliance is not acceptable. We expect to see the number of times we need to use our powers increase. The regulator has a range of powers to tackle non-compliance including serving fixed penalty notices and escalating daily penalties notices.”
So far over 30,000 employers have already staged for auto-enrolment. It is predicted that a further 1.25 million will start auto-enrolling staff over the next three years.
Speaking at the National Association of Pension Funds annual conference earlier this month, TPR Chairman Mark Boyle warned that as the number of employers that stage for Auto-Enrolment rises significantly, so too will its use of statutory powers such as compliance notices, fixed and escalating penalties.
He said: “As we deal with smaller employers, we will see more who, despite our message to prepare early, leave it too late or do not comply at all. This type of non-compliance is not acceptable. That’s why we have been given these powers and we will use them, where appropriate.”
Nigel Bolton, Pensions Partner at Irwin Mitchell, said:
Expert Opinion
The news that The Pensions Regulator has issued its first penalty notices for auto-enrolment non-compliance comes as no surprise and I expect it will only be the tip of the iceberg, particularly as more SMEs reach their staging date.
“We know that many smaller companies are struggling with auto-enrolment and it is clear that the Regulator is taking a tough line and not taking a lack of preparation as an excuse. SMEs must face up to their legal obligations now or face costly penalties further down the line.”
Nigel Bolton - Partner