We will use our powers to protect pension savers – By Darren Ryder, Director of Automatic Enrolment at TPR
In our latest compliance and enforcement report, we have once again demonstrated how we are using our powers to safeguard pension savers.
The bulletin for January to March 2018 shows how we are ensuring employers meet their automatic enrolment pension duties.
This quarter’s enforcement action represented over 20% of the AE powers we’ve ever used, including nearly 20,000 Compliance Notices (CNs), over 11,000 £400 Fixed Penalty Notices (FPNs) and over 2,500 Escalating Penalty Notices (EPNs) for those who persistently failed to meet their duties.
This high number was due to a bulge of employer staging dates in autumn 2017, with their declaration of compliance due date falling five months later.
We also successfully prosecuted a company and its managing director for falsely claiming they had put their staff into a pension. Employers who deliberately put incorrect information on their declaration of compliance risk being found out in a number of ways, including from spot checks or whistleblowers.
Huge numbers of employers are starting their workplace pensions duties every month and the vast majority are successfully meeting their duties.
However, where an employer fails to do the right thing for their staff, we will take action using the wide range of powers available to us.
The bulletin highlights:
- A total of 35,862 enforcement powers were used between January and March 2018 compared to 28,446 the previous quarter.
- 3,721 more fixed penalty notices were issued this quarter compared to last quarter.
- 2,037 more compliance notices were issued this quarter compared to last quarter.
- 431 more unpaid contribution notices were issued this quarter compared to last quarter.
What steps can you take to ensure compliance with automatic enrolment?
You will need to ensure that you pay and maintain regular contributions into your chosen pension, monitor the age and earnings of your staff and enrol eligible staff, process any requests to join or leave the scheme, and keep and maintain accurate records. You’ll also need to re-enrol eligible staff into an automatic enrolment pension scheme every three years. Let’s take these in turn:
- Pay and maintain regular contributions into the pension
Employers need to calculate and pay the employer contributions to their staff’s pension scheme on an ongoing basis. In addition, they’ll need to calculate staff contributions, make the necessary deductions from payroll and transfer their contributions to the pension scheme.
They’ll have agreed what these rates are and when to pay them with their chosen pension scheme. By law, you and your staff have to make minimum contributions into the scheme, and you should be aware that these minimum contribution levels increased in April 2018 and are due to increase again in April 2019 (see below).
|Date effective||Employer minimum contribution||Staff contribution||Total minimum contribution|
|Current until 5 April 2019||2%||3%||5%|
|6 April 2019 onwards||3%||5%||8%|
- Monitor the age and earnings of all staff
Employers will need to monitor any changes in age and earnings of their staff to identify if they become eligible for automatic enrolment. They’ll also need to check eligibility of any new members of staff on the day they start work. Should staff members become eligible (for example by turning 22, or by meeting the earnings thresholds), then they’ll need to be put into a pension scheme and contributions paid to it. Payroll software should be able to support employers with this.
- Process requests to opt in, join or leave the scheme, and keep and maintain accurate records.
Opt in/join: If any staff write to their employer asking to join their workplace pension scheme, they must be put into it within a month of the request being received. Employers will have to pay into the pension scheme unless they are aged 16-74 and earn less than £503 a month or £116 per week.
Opt out: If any staff choose to leave the pension scheme within one month of being put into it, employers need to stop taking money out of their pay and arrange a full refund of what has been paid to date. This must happen within one month of their request.
Keeping records: Staff records need to be kept up-to-date, including who’s been enrolled and when, information about the pension scheme, and the contributions being paid. These records must be kept for six years, except for requests to leave the pension scheme which must be kept for four years.
Every three years, all staff who either opted out of their workplace pension scheme or have ceased to become members need to be re-assessed and re-enrolled if they meet certain criteria. Employers will need to write to them to tell them what they’ve done – and then they’ll need to re-declare their compliance to The Pensions Regulator.
Further information on ongoing duties can be found on The Pensions Regulator’s website.
Business advisers: www.tpr.gov.uk/knowing-your-clients-ongoing-duties