The latest workplace pensions scheme figures indicate that, as of July 2017, more than eight million workers are enrolled by approximately 650,000 employers. With an additional 50,000 schemes on the horizon, it would be easy to think that the automatic-enrolment regime is now fully bedded down and compliance, including for larger employers, re-enrolment, well understood.
However, The Pensions Regulator (TPR) has been publically naming and shaming non-compliant employers, and, in September, announced its first prosecution of an employer and its MD wilfully failing to comply with the organisation’s statutory duties, with the risk of an unlimited fine and two years in prison.
The Employer automatic-enrolment research Spring 2017, undertaken by TPR in July 2017 and published in September 2017, showed that the level of employer confidence in their ability to comply with the not-so-new law was actually decreasing. Figures show that 92% of April-July 2017 stagers felt very or fairly confident, compared with only 69% of January 2018 stagers. Further, more of those later stagers, necessarily smaller employers, were taking professional advice. It appears that nothing concentrates the mind more than an approaching statutory deadline and fixed £400 and escalating daily penalties from £50 to £10,000.
Employers may be tempted to dodge compliance by encouraging employees and new recruits to opt out of the scheme, possibly in return for higher pay. But great care needs to be taken for employers not to carry out prohibited recruitment or inducement conduct, exposing them to a fine of between £1,000 and £5,000. Although it is still possible for flexible benefit structures to operate and for high earners to receive cash instead of a pension contribution, employers now need to tread a careful path to do so in a legally compliant way.
A good place to start, or continue safely navigating the auto-enrolment maze, is online on the regulator’s legal duties checker.
Anne-Marie Winton is partner at ARC Pensions Law