Employers are being warned to ensure they are complying with their ongoing automatic enrolment duties after inspections found a number of errors.
The warning from The Pensions Regulator (TPR) follows a series of in-depth compliance inspections of more than 20 large employers across the UK, with a total of nearly 1.5 million staff.
The alert to employers comes as TPR today publishes its latest compliance and enforcement bulletin. The bulletin shows how many times TPR has used its automatic enrolment and frontline regulation powers between January and June this year. The use of powers has remained broadly steady since the previous bulletin covering the six-month period of July to December 2021.
The inspections to check employers are complying fully with workplace pensions law were carried out earlier this year. They showed a number of common errors in respect of calculating pensions contributions and communications to staff.
Employers are being warned to ensure they do not skip important steps in complying with their ongoing duties and to consult TPR’s online information.
While the inspected firms successfully enrolled eligible staff into a pension and made contributions, administrative errors with their ongoing pensions duties put staff at risk of not receiving the pensions they are due.
The firms, which are across the transport, hospitality, finance and retail sectors, have now corrected or are working to correct errors, including making backdated contributions.
TPR’s Director of Automatic Enrolment Mel Charles said: “The vast majority of employers are successfully meeting their automatic enrolment duties, however administrative mistakes can put staff at risk of missing out on their pensions and employers at risk of unintended non-compliance.
“While the errors we have found are technical in nature, these types of oversights can indicate broader non-compliance issues.
“Correcting these mistakes can be costly for employers because as well as needing to make backdated payments for staff receiving incorrect contributions, they can also lead to financial penalty.”
Key errors which can lead to employers needing to make costly backdated contributions include using incorrect earnings thresholds. Employers should ensure they consult TPR guidance on this. Employers should also ensure they check government guidance on maternity pay as miscalculating this can impact pensions contributions.
Mr Charles also highlighted that when completing re-enrolment, which employers must carry out every three years, they should check their systems and processes are up to date and running smoothly.
In respect of automatic enrolment powers, the bulletin shows TPR issued:
- 20,382 compliance notices (compared to 20,555 for the previous period)
- 13,604 unpaid contribution notices (compared to 13,376)
- 15,302 fixed penalty notices (compared to 17,284)
- 5,918 escalating penalty notices (compared to 6,988)
In respect of the use of TPR’s frontline regulation powers, the total number of statutory powers used was 203 compared to 244 in the previous six-month period.
Included in the bulletin are powers used in respect of TPR’s prosecution of a pair of fraudsters who were part of a criminal enterprise that tricked more than 200 savers into transferring their pension pots into fraudulent schemes.
Following a prosecution by TPR Alan Barratt, 62, of Burnham Road, Althorne, Essex and Susan Dalton, 66, of Brookdale, Rochdale, Lancashire were sentenced at Southwark Crown Court in April after admitting charges of fraud by abuse of position arising from their roles as trustees of pension schemes.
Barratt received a sentence of five years and seven months while Dalton was sentenced to four years and eight months in prison. The pair were also banned from acting as company directors for eight years following a request by TPR.
The court set a timetable under the Proceeds of Crime Act to investigate whether any of the of the money taken in the fraud can be recovered from the defendants, with an initial hearing set for 3 February 2023.
Notes to editors
- TPR regularly carries out compliance inspections on employers of all sizes across all employment sectors to ensure they are meeting their workplace pensions duties correctly. Employers are selected for inspections on a risk-based approach including whether they are in a sector with greater risk of non-compliance or where TPR has information which may indicate failure to comply.
- Common errors in respect of communicating to staff about their workplace pension includes inaccurate wording or using online portals for communicating general pensions information rather than direct emails to staff about how automatic enrolment affects them. TPR has guidance about communicating to staff including template letters employers can use. Employers should also check TPR guidance when writing to staff about whether their scheme uses relief at source or net pay arrangements.
- TPR is the regulator of work-based pension schemes in the UK. Our statutory objectives are: to protect members’ benefits; to reduce the risk of calls on the Pension Protection Fund (PPF); to promote, and to improve understanding of, the good administration of work-based pension schemes; to maximise employer compliance with automatic enrolment duties; and to minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of the regulator’s functions under Part 3 of the Pensions Act 2004 only).
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