PENSIONS INSIGHT
Workie bares his teeth!
Helen Hargreaves MSc ChFCIPPdip, CIPP associate director of policy, reviews TPR’s enforcement powers giving examples of their application
W hen the roll-out of automatic enrolment ‘the Regulator’) took a very welcome but surprisingly softly-softly approach to compliance, preferring to help educate those who were confused or unsure about their obligations rather than immediately penalising the slightest infringement. This approach was reinforced in 2015 with the introduction of Workie, the friendly and genial monster encouraging Britain’s workforce to not ignore their workplace pension. But as more and more employees have joined a workplace pension scheme, behind the scenes the compliance activity of TPR towards employers has gradually been increasing. Workie has been showing his teeth – well, he would have if he hadn’t already been pensioned off. The Regulator says that its approach to compliance is based on preventing problems developing in the first place: by being clear about what they expect from employers and offering a range of online resources for employers and their advisers to help them through automatic enrolment, the trustee toolkit, guidance on scams, and information on other areas including funding and investment, scheme governance and record-keeping. The Regulator’s enforcement options So, just what are the enforcement options open to TPR and how have they been applying them? If TPR decides to take regulatory and began back in 2012, The Pensions Regulator (TPR,
enforcement action their options include: ● issuing notices that require individuals, companies or third parties to take specific action within a certain time
it for them. But, instead, as part of that enforcement action, TPR may instruct the employer to pay both their own and their staff member’s unpaid contributions to put staff in the position they would have been in if they had complied on time; this may include backdating contributions to the day that the member of staff first met the age and earnings criteria to be put into a scheme. TPR may also estimate and charge interest on unpaid contributions. A penalty notice is used to punish persistent and deliberate non-compliance. A fixed penalty notice is £400, payable within a specific period and may be issued if employers don’t comply with statutory notices. It’s important to note that TPR can issue a fixed penalty without having first issued a statutory notice. TPR can also issue an escalating penalty notice for failure to comply with a statutory notice and pay contributions that are due. This penalty has a prescribed rate of £50 to £10,000 per day depending on the number of staff employed by the business. The ultimate enforcement action is of course prosecution of those employers that deliberately fail to enrol eligible staff or knowingly include false information in a declaration of compliance. Spot-checks In July 2018, the Regulator announced that employers across the UK suspected of providing false or misleading information to it about how they were meeting their automatic enrolment duties, would be targeted with short-notice inspections. The spot-checks would also target employers
...compliance is based on preventing problems developing...
● recovering late or missing payments from an employer on behalf of a scheme ● issuing a freezing order where a scheme plans to wind up so that they can explore any concerns and encourage negotiations ● banning trustees who they don’t consider fit and proper for the role ● issuing fines for breaches of the law ● prosecuting certain offences in the criminal courts. Whilst attention naturally focuses on the fines and prosecutions, TPR’s initial approach is often informal action whereby it can issue guidance and instruction by telephone, email, letter and in person. The Regulator may also send warning letters confirming a set time frame for compliance with the duties. The next option is a statutory notice which is mailed out to employers directing them to comply with their duties and/or pay any contributions they have missed or are late in paying. The notice may tell the employer that they must pay all the unpaid employer contributions and their staff members must pay theirs, unless of course the employer chooses to pay
| Professional in Payroll, Pensions and Reward | November 2018 | Issue 45 30
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