Automatic Enrolment Compliance and Enforcement

Key Points from The Pension Regulator’s Automatic Enrolment Compliance and Enforcement quarterly bulletin: 1 January – 31 March 2015.

Preventing non-compliance

  • Eight in ten smaller medium and small employers have consulted an adviser to help them comply with their duties, or will do so.
  • Gaps in knowledge remain, in particular among accountants and bookkeepers who continue to have the lowest level of understanding of all intermediaries about automatic enrolment.
  • Employers who choose to use an adviser, for example an IFA, accountant or bookkeeper, should understand exactly what help they are being offered.  Both parties should also be clear who is taking responsibility for completing each task.
  • While having an automated payroll system is not a statutory duty, The Pensions Regulator’s research shows that employers with appropriate payroll software will be able to comply more easily with their automatic enrolment duties.

Regulation changes update – effective 1 April 2015

  • New regulations came into force 1 April 2015. They aim to reduce the administrative load especially for small and micro employers. The changes are not mandatory and so employers can continue to follow the ‘old’ rules indefinitely.

Selected powers used in the period

  • 48% of all cases (where the power to demand information and documents under section 72 of the Pensions Act 2004) took place in quarter 1 2015.
  • 213 compliance notices were served during quarter 1 2015 under section 35 of the Pensions Act 2008 (the power to remedy a contravention of one or more automatic enrolment employer duty provisions).
  • 54% of all fixed penalty notices raised under section 40 of the Pensions Act 2008 (of £400) for failure to comply with a statutory notice or some specific employer duties, were levied in quarter 1 2015.
  • 100% of all escalating penalty notices served under section 41 of the Pensions Act 2008 (of between £50 and £10,000 per day, depending on size) for failure to comply with a statutory notice were raised in quarter 1 2015.

Consultation launched on the need for a basic automatic enrolment assessment tool

  • A consultation was recently launched on whether to provide a basic automatic enrolment assessment tool for employers who use the Basic PAYE Tool (BPT) offered by HM Revenue and Customs (HMRC).
    • 200,000 small and micro employers currently use the Basic PAYE Tool.

Lessons learned for employers from The Pensions Regulator’s casework

  • Every employer with at least one member of staff has automatic enrolment duties.  The Pensions Regulator has found that many employers assume the only duty that applies to them is automatically enrolling staff meeting the age and earning criteria for eligibility.

Proactive Drives

  • Completing a declaration of compliance is a legal requirement
  • The Pensions Regulator has been using the systems and data available to proactively check the accuracy of information submitted by employers when they declare compliance. It selected a number of medium-sized employers in February for further engagement, which included visiting premises to check records and interviewing key staff.
  • More than 1.3 million employers need to comply with their new workplace pension’s obligations over the next three years, ensuring the accuracy of declarations of compliance made by employers and targeting non-compliance risks will continue to be a focus for The Pensions Regulator.

Working in partnership with other agencies

  • Non-compliance with one area of regulation may indicate a heightened risk of non-compliance with pension’s legislation. The Pensions Regulator is currently working with a number of other agencies and is looking at potential areas to target for future joint operations with other regulatory bodies.

Compliance & Enforcement Quarterly bulletin 1 January – 31 March 2015
The Pensions Regulator

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