Auto enrolment breaches are still coming to light. But owning up is the best policy.
Those who have watched Woody Allen’s Match Point will recall the phrase “You have to learn to push the guilt under the rug and move on.”
But we strongly recommend anyone dealing with The Pensions Regulator (TPR) to avoid this or any other advice they may have gleaned from the movies or from sources of fiction generally.
After all, pension auto enrolment involves dealing with stone-cold reality, and although TPR has announced a new crackdown on non-compliant firms, we find it still tends to be far more sympathetic to those who hold their hands up to inadvertent breaches than to those who try to sweep things under the carpet.
The key message is that if you suspect you may have messed up then you should face the music immediately.
If you act quickly to rectify matters in a way that is in the best interests of scheme members, ensuring that they are in the optimum position they could have been in the breach hadn’t occurred, then TPR may still show a degree of leniency.
So, if you spot anything amiss, get in touch with Chase de Vere. We will give you the very best advice for dealing with the situation, ensuring that any fines imposed are at least minimal. It might even be possible to avoid fines altogether.
Worryingly, the number of auto enrolment breaches that have been coming to the surface seems to have increased markedly of late, and this is only partially explained by the recent regulatory clampdown.
Many of the cases we are coming across are not resulting from TPR audits but from employers proactively getting in touch with us as a result of something coming to their attention. For example, some have recently switched payroll providers and the new provider has noticed a problem that the previous one hadn’t.
In other cases, we have identified issues whilst conducting reviews. For example, a firm may have decided to change payroll systems but not noticed that the new system was failing to issue statutory notices – thereby putting them in breach of the regulations.
We have also experienced an overseas employer which used its overseas bank account to pay UK-resident employees who worked from home but did not realise it had a duty to comply with auto enrolment.
The first step was for it to establish a UK bank account so that a workplace pension could be set up before it auto-enrolled the employees and paid both the employer and employee backdated contributions to their staging dates. It notified TPR as soon as it was aware of the situation and, although it was several months late on the declaration, it did not end up with any fine.
Another client was an overseas company which thought it had nothing to worry about because all its UK employees were members of its overseas pension policy. But, because this turned out not to be compliant, it had to establish a workplace pension that was and to auto-enrol the workforce into it. In this case the employer was around 16 months past its staging date but TPR granted it a recovery period to correct matters.
To date there has also been no fine for a client who hadn’t done anything about auto-enrolment for two years after its staging date. It had assumed its accountant had sorted it all out, and had never even been contacted by TPR. But the error came to light when a new lady joined the company.
Once we had put a scheme in place, the client backdated employer and employee contributions to inception and also paid the estimated loss of investment returns into members’ funds. As well as assisting with the technicalities, we communicated with its workforce about the issue and offered face-to-face support.
These, and numerous other examples I could give you, demonstrate that, although TPR is cranking up the pressure, it can still manage to be eminently reasonable. So, burying one’s head in the sand is the very worst approach any employer could take.