Lawyer Says Regulator Will ‘Show Its Teeth’ On Suspected Non-Compliance
By David Shirt
The Pensions Regulator’s announcement that it has initiated 89 investigations into suspected auto-enrolment non-compliance reveals the huge task facing smaller firms ahead of their imminent staging dates, according to a pension expert at law firm, Irwin Mitchell.
Launched in October 2012, auto-enrolment is considered to be the most significant shake-ups of occupational pension schemes in more than 60 years. It makes it necessary for all UK employers to place all ’eligible job holders’ into a qualifying pension arrangement. All employers are obliged to contribute to that pension arrangement and monitor their workforce, as well as keep records of their workforce’s membership of the scheme.
The laws came into effect for the UK’s largest businesses last year and, during this summer, organisations employing between around 4,000 and 2,000 will need to comply. From April 2014, businesses with between 249 and 160 employees will need to be ready. Firms with fewer staff members will be required to comply with the rules by a particular ‘staging date’ according to their size up until 2018.
The Pensions Regulator says that over 1,150 larger employers have registered an auto-enrolment scheme so far, with 89 facing an investigation over possible non-compliance with their legal duties.
Nigel Bolton, partner at national law firm Irwin Mitchell, said: “This recent revelation is a warning of the challenges which lie ahead for SMEs currently preparing for automatic enrolment and also serves as proof that the Pensions Regulator will be proactive in seeking to identify non-compliance and will show its teeth where appropriate.”
Irwin Mitchell recently published its own research into auto-enrolment and the readiness of small businesses. The report highlighted that although many SMEs thought that they were ready for auto-enrolment, many had not actually considered the key issues that need to be dealt with ahead of their staging date.
Nigel added: “Our own research suggests that over a third of SMEs (37.2%) state that the pension scheme which they currently operate does not (or may not) comply with automatic enrolment requirements and 37.8% say that their current payroll system is not compliant with automatic enrolment.
“In this context, it is clear that adequate time and resources will need to be allocated by businesses in order to ensure that a suitable solution to automatic enrolment is in place before their staging date, to avoid being the subject of one of the Pensions Regulator’s investigations”.
The findings from Irwin Mitchell’s auto-enrolment survey can be downloaded here.