1st February 2016
The latest compliance and enforcement statistics published by The Pensions Regulator (TPR) show how the number of fines issued have soared over the last quarter, coinciding with the first batch of small and micro employers reaching their staging dates. David Smith, director of financial planning at Tilney Bestinvest, comments on the report…
Over £400,000 in Fixed Penalty Notices were issued by the regulator in the last quarter of 2015 to employers for failure to meet their Auto Enrolment obligations.
That is an increase of 178% over the amount issued in the preceding 3 years, emphasising that the TPR will not accept ignorance as an excuse for not putting in place a qualifying pension scheme within the required timescale.
There is undoubtedly a direct correlation between the boom in fines and the influx of small and micro employers beginning, or not beginning as the case may be, their Auto Enrolment journey.
And, whilst many cynics view this as further evidence of the Government suffocating the smallest employers, it is at the very least a statement of intent by the Regulator that non compliance will not be tolerated, regardless of size or stature of the employer in question.
Quite rightly, there is sympathy for smaller employers as they tend not to have the resource of their larger peers to deal with such complex legislation and time consuming activities.
Many do not have the financial clout to meet the costs of the pension contributions in question, never mind paying for professional assistance, but now they face a real threat of significant penalties.
And, despite the Regulator’s claims at raising awareness, there is a significant lack of knowledge out there amongst the smallest employers.
Whilst some legitimately believe they have no requirements to do anything, there are many employers that believe they simply won’t be caught and at the very least, won’t be fined.
The recent data published clearly shows the contrary and epitomises the Regulator’s zero tolerance stance.
The Department for Work and Pensions released a consultation paper on 26 January, seeking views on potentially simplifying legislation for smaller employers but for many, this will be after the proverbial horse has bolted; by the time it comes into force (if at all) it will do little to help those who have recently or are imminently due to hit their staging dates.
And whilst the smallest employers may feel aggrieved at the effect of Auto Enrolment on their bottom line, just dismissing their duties will only serve to compound their problem. Ultimately, we can all cry hard done by, but the fact remains; employers must comply or face the penalty.
What is for certain is that this is only the beginning. By the end of December 2015, less than 100,000 employers had reached their staging date. In 2016 alone, another half million small and micro employers / businesses will need to comply with their duties. If the murmurs amongst the smallest enterprises ring true, the Pensions Regulator is in for a bumper year in fines.