If you read nothing else, read this…
- The number of employers stuggling to comply is likely to rise as small employers begin auto-enrolment.
- The Pensions Regulator (TPR) issued its first section 89 report to highlight key lessons to help employers avoid non-compliance.
- TPR runs webinars to offer advice.
- TPR and pension consultants can focus on problems and help employers get back on track.
Details of the case were published in The Pensions Regulator’s (TPR) section 89 report, aimed at helping employers avoid failing to comply with the legislation.
The number of employers struggling with auto-enrolment compliance is predicted to rise as the legislation starts to affect smaller employers, yet larger organisations may still fail to comply with their auto-enrolment duties.
If employers are struggling to implement auto-enrolment, they should seek help from organisations such as TPR.
Nicola Edwards, head of compliance and enforcement in TPR’s automatic-enrolment team, says: “It is about working with employers and giving them the option to use us. Employers can contact us so we can help get them up to speed with compliance. Help from us is the best practice.”
TPR analyses registration data to identify organisations that may be struggling to comply and the issues that are causing problems.
For example, some employers and pension providers have reported problems with payroll not meeting the requirements of auto-enrolment.
In Dunelm’s case, it attributed its failings to problems with its payroll, key members of staff involved with auto-enrolment leaving the organisation, and data quality issues when uploading information with its pension provider.
Payroll not ready
“Some employers’ best efforts are let down by something,” says Edwards. “We have seen quite a lot of large employers have problems with payroll systems that are not ready for auto-enrolment on time and there have also been issues with governance. For those that are doing their best to intervene and get it right, we have been hands-on to help get employers back on track with compliance.”
Employers can tackle any issues by raising the alarm with TPR or their pension consultant sooner rather than later. Although consultants and advisers come at a cost, their expertise can be invaluable.
Anna Taylor, a pensions lawyer at Linklaters, says: “Benefits consultants can help put appropriate procedures in place, help employers to select a provider, check payroll processes and see if employee communications are compliant. TPR’s section 89 report is helpful, because it shows the regulator’s approach to compliance. It is clear the regulator spent a lot of time talking to the employer, finding out what went wrong and working with the employer to put things right.
“The regulator has said it wants to educate employers to help them comply if they are struggling. There is a lot of information and also tools on TPR’s website, and it has said organisations should get in touch with it if they are having difficulties.”
Information available from TPR includes webinars, to which employers can sign up to obtain help and advice to understand compliance issues.
Free information
The Pensions Advisory Service is also a useful source of help, providing employers with free information and guidance on pension matters.
But once employers have received advice, it is down to them to act on it.
Even if compliance continues to be a struggle for employers, all is not lost. TPR allows organisations time to put things right if they are found guilty of not complying. Dunelm, for example, was given the chance to complete registration and notify the regulator of any outstanding issues before being issued with a compliance notice by TPR under section 34 of the Pensions Act.
Up to 23 April 2014, TPR had issued 15 compliance notices. In April, research published by law firm Irwin Mitchell showed that more than one-third (35%) of respondents that had undergone auto-enrolment would have prepared differently if they were to perform the task again.
Numbers will rise
However, Steve Herbert, head of benefits strategy at Jelf Employee Benefits, says there is a fear that the number of organisations struggling to meet their duties will rise as more employers reach their staging dates.
“It is very likely that there will be a marked increase in the numbers failing to adequately meet their new duties,” he says. “The savvy organisations will have appointed advisers, selected a suitable pension scheme and put in place a robust project plan to ensure compliance many months before their staging date.”
TPR’s message is clear: it wants to help, but it will use all its powers to enforce compliance. Ian Digby, industry liaison manager at TPR, says: “Our own rule is to educate and enable, so when employers ignore their duty, we will use our powers in legislation to ensure it is fixed.
“But we act proportionately. Employers should engage early and do the right thing by telling us. We will help where we can.”
