Pensions
Employers’ duties haven’t changed
The Pensions Regulator provides an update, and a reminder that automatic enrolment duties have not changed, and employers must comply as normal
P rofessional bodies have reported that their members are busier than ever, with clients relying on their advisers to provide them with step by step guidance on the evolving business support schemes. And as we continue to face the unfamiliar, it has never been more important to keep protecting pensions. Staff should not miss out on a pension because their employer failed to meet their duties. Agents should ensure that their clients are aware they continue to have automatic enrolment duties. More than ever, finance and pension professionals need to ensure they are on top of the facts so they can confidently provide the right help and support. The Pensions Regulator expects any missed contributions to be paid over to pension schemes, and then invested as promised to help deliver the retirement outcomes people expect. We are monitoring pensions closely and we will take enforcement action where an employer is not complying with their legal duties. In one example, we followed up a report that a major global restaurant operator had not paid across £45,000 in missing staff contributions for its UK business. The payment has now been made and contributions remain ongoing. In another example, we investigated a whistleblower report that contributions were not being made by a scaffolding firm amounting to £90,000 on behalf of 100 savers. The firm has now committed to making up the shortfall with their pension provider. We know from experience that even the threat of a fine is often enough to
resolve a report of late contributions. Encouragingly, on-time compliance rates for employers declaring that they have implemented automatic enrolment for the first time, as well as those undertaking three yearly re-enrolment, has held steady, including among those that received compliance notices. Despite the challenges faced by businesses, we have to date not seen a significant or unusual spike in missed pensions contributions. The vast majority of employers are continuing to meet their automatic enrolment responsibilities – including setting up a pension scheme and enrolling staff into it. Every three years employers must also assess staff and put those who opted out, back into a pension and our information shows again that employers continue to do this successfully. Re- enrolment also provides those who chose to opt out previously, a good opportunity to reassess their decision and re-engage with saving for their retirement. A common question payroll and pension professionals may be receiving from struggling clients is, what happens if I don’t comply? The answer is, simply, that they run a high risk of enforcement action, including an initial £400 fixed penalty which could then increase to a daily
escalating penalty for those employers that still do not comply with their duties. The size of the escalating fine depends on the size of the employer and is £50 per day for small businesses and up to £10,000 per day for larger businesses. The Pensions Regulator wants to stop employers from reaching this point. Automatic enrolment duties have not changed, and employers must comply as normal. More time is needed to judge the ultimate impact of the pandemic on saving, and we know employers will continue to face challenges, but early indications are that the vast majority of employers, despite the difficulties, have continued to successfully meet their workplace pensions duties towards their staff. The situation is constantly evolving, and we are continuing to respond to the changes. We are keeping our approach and guidance under review. But our message is clear. We will take the right action at the right time to support employers and ensure savers are protected. n Useful links ● AE guidance for employers: www.tpr.gov. uk/employers ● AE guidance for advisers: www.tpr.gov. uk/advisers ● COVID-19 guidance: www.tpr.gov.uk/ covid-19-coronavirus-what-you-need-to- consider
...we have to date not seen a significant or unusual spike in missed pensions contributions.
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| Professional in Payroll, Pensions and Reward |
Issue 65 | November 2020
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