Auto Enrolment is working. The Pensions Regulator’s fourth annual analysis clearly shows that Auto Enrolment is successfully helping to revert a long standing decline in pension provision that many assumed could never be changed. Two thirds of all employees are now active members of a pension scheme, compared with a much lower 47% in the year 2012. That is a dramatic positive change.
Compliance rates for the first group of small employers and micro employers to undergo Auto Enrolment are above 95% which is incredibly impressive and clearly demonstrates the effectiveness of The Pension Regulators communications and marketing to employers. This has included subtle ‘nudge’ letters and emails, awareness raising with trade networks, and less subtle national advertising campaigns in partnership with the Department of Work And Pensions.
However, of course, there are businesses that are not complying with the new Auto Enrolment rules in a timely manner. For these businesses The Pensions Regulator may do one or more of these things; take informal action, gather information, issue a statutory notice, issue a penalty (fixed penalty notice, escalating penalty notice, Prohibited Recruitment Conduct Penalty notice, civil penalty), statutory powers and orders, court action.
Of course, the enforcement action will increase in seriousness and severity the longer the employer is non-compliant. You can find more detailed information about the enforcement action taken against non-complying businesses by visiting “Section 5: Enforcement Options” of The Pensions Regulator Compliance & Enforcement Strategy. The document also includes specific, more detailed information about the amount of the fines, which are dependent on the size of the businesses.
Further, if you are given a notice that you do not agree is valid then you can apply to The Pensions Regulator for a review. The review application along with any relevant supporting documents have to be provided within 28 days of the notice being issued however. Once you have submitted the relevant information The Pensions Regulator will let you know when a decision from them based on the information you have provided can be expected.
For some added context, according to The Pensions Regulators Q1 2016 press release;
• 3,057 Compliance Notices Have Been Issued – In total, 7,834 to date.
• 806 Fixed Penalty Notices Have Been Issued – In total, 2,234 from 2012 to date.
• 96 Escalating Penalty Notices Have Been Issued – In total, 127 to date.
So, although compliance is very high, it is far from perfect. We estimate that as more and more businesses, large and small, become more aware of and familiar with Auto Enrolment and as The Pensions Regulators subtle and less subtle communications and marketing efforts continue and more employers get tuned into things like The Pensions Regulator duty checker then the rates of compliance will continue to trend upwards even from their already high level.
If you would like to find out more about auto enrolment including information about your staging dates, penalties for non-compliance, understanding your costs and automatic re- enrolment then visit the official site for The Pensions Regulator.