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Keeping on the right side of The Pensions Regulator

30 April 2018

The government’s pension auto-enrolment regime has certainly received its fair share of publicity but the messages imparted clearly haven’t got through to everyone.

Indeed, we are always having accountants refer ‘distressed clients’ who haven’t done what they should have done.

We have even come across one case of a business that should have staged a year ago but seemed to know little about the requirement, despite being continually hassled by its accountant.

But the key message is that anyone who chooses to indulge in such non-compliance is now far less likely to get away scot-free. The honeymoon period is well and truly over.

Recent months have seen The Pensions Regulator (TPR), which is responsible for policing auto-enrolment legislation, prove that it is far from toothless. It has already even demonstrated that it is not afraid to indulge in criminal prosecutions as a final resort. 

However busy any employer may think it is, it should never forget that wilful failure to comply with auto-enrolment is actually a criminal offence – which can incur an unlimited fine in a magistrates’ court or up to two years’ imprisonment in the Crown Court.

This February bus services organisation Stotts Tours Oldham and its managing director were sentenced to pay over £60,000 in fines and backdated pension contributions after being found guilty of failing to auto-enrol 36 employees into a workplace pension scheme in June 2015.

This April TPR also announced that it is to prosecute national recruitment firm Workchain, its directors and some of its senior staff on the suspicion that they illegally opted employees out of the company pension scheme.

The defendants, who have been summoned to appear at Derby Magistrates’ Court this June, are accused of logging onto the workplace pension scheme’s online system and using employees’ personal details to terminate their scheme membership – thereby contravening auto-enrolment rules which require employees to opt out themselves.

Non-compliance can also incur some very unpleasant penalties well before prosecution starts figuring on the radar. 

For example, any firm that ignores both an initial warning letter and statutory notice may receive a fixed fine of £400. This could be followed by escalating penalties at a daily rate of between £50 and £10,000 – depending on the number of staff employed.

One hotel group has already incurred escalating penalties of £52,500, and even very small businesses can face penalties running into five figures.

We have come across a carpet shop with only two employees that allowed an escalating penalty of £50 a day to produce a total bill of over £12,000! Its accountants had been continually chasing it to flag the issue but the efforts had fallen upon deaf ears.

So no-one should be left in any doubt that all correspondence from TPR should be paid due attention to.

TPR will not tolerate people ignoring it or its prescribed duties but the good news is that, unlike HMRC, it tends to be pretty reasonable towards who hold their hands up to non-compliance and vow to mend their ways going forwards. After all, its primary objective is to help employers meet their duties.

It is essential that all employers make it a high priority to understand exactly what those duties are and that they audit their processes to ensure that they are doing everything correctly.

Furthermore, if any problems do arise they should engage with TPR as soon as possible and let it help them sort things out.

There is also a lot to be said for engaging an expert firm of advisers to help with auto-enrolment issues. Once TPR realises that you have done so it knows it doesn’t have to be so hands on in chasing you and realises that the job will be done properly.

Using such an adviser can also have considerable advantages in terms of speed. We are often able to sort out problems in only a few days, which can be a godsend for a firm accumulating daily escalating penalties.        

If you would like to know more about how Chase de Vere can help you with complying with your auto-enrolment requirements and satisfying TPR then please do not hesitate to contact us on 0345 300 6256 or complete this simple form and we’ll call you.