The new Auto Enrolment legislation means employers have legal duties to automatically enrol certain members of staff into a pension scheme and make contributions towards it.  Auto Enrolment is compulsory and affects every company that employs staff in the UK, whether that is 1 or 1000 employees.  The Pensions Regulator is responsible for ensuring that a company complies with their employer duties.  The Pensions Regulator have various powers at their disposal as well as access to HMRC’s RTI database to help them enforce the legislation.

The Pensions Regulator’s Approach

They recognise that most employers will want to do the right thing for their staff.  Their overall approach is to educate and enable you to comply with the legislation.  This puts you in a position to make the right choices and decisions. However, the responsibility for complying lies with you, the employer.

They aim to promote good compliance behaviour among employers by ensuring that the legislation is being applied fairly and consistently.

In cases where you haven’t understood your duties or have been unable to comply, they’ll work with you to get you compliant.

But if you have chosen to ignore your duties, they will use their powers where necessary to ensure compliance.

Enforcement options

The following options are available to The Pensions Regulator in order to ensure compliance.

They can issue guidance and instruction by telephone, email, letter and in person. They can also send a warning letter confirming a set time frame for compliance with the duties.

Statutory notices can direct you to comply with your duties and / or pay any contributions you have missed or are late in paying. They have further discretionary powers which allow them to estimate and charge interest on unpaid contributions and direct you to calculate and / or pay unpaid contributions.

They can issue penalty notices to punish persistent and deliberate non-compliance.

A fixed penalty notice will be issued if you don’t comply with statutory notices, or if there’s sufficient evidence of a breach of the law. This is fixed at £400 and payable within a specific period. They can also issue an escalating penalty notice for failure to comply with a statutory notice. This penalty has a prescribed daily rate of £50 to £10,000 depending on the number of staff you have.

They can issue a civil penalty for cases where you fail to pay contributions due. This is a financial penalty of up to £5,000 for individuals and up to £50,000 for organisations.

Where employers fail to comply with a compliance notice or there is evidence of a breach, they can issue a prohibited recruitment conduct penalty notice. This is currently set at a maximum fixed daily rate of £5,000 for organisations with over 250 staff. They aim to fully recover all the penalties that they issue.

They can take civil action through the court to recover penalties.

Employers who deliberately and wilfully fail to comply with their duties may be prosecuted.

They can also confiscate goods where there is a criminal conviction and restrain assets during criminal investigations.

We have worked closely with The Pensions Regulator to create Simply Enrolment in order to help you become compliant with the legislation, avoiding any warning notices and fines along the way!