Darren Ryder, Director of automatic enrolment at the Pensions Regulator reports on the steps that have and are being taken to ensure its continued success

Automatic enrolment (AE) is now business as usual for UK companies. Start-ups know they need to factor in workplace pensions when taking on staff and employees now expect to be enrolled into a pension scheme when they get a new job. 

More than 1.5 million employers have declared their compliance with automatic enrolment responsibilities.

A report [1] we published recently shows that automatic enrolment has changed pensions saving. Our annual comment and analysis publication shows workplace saving among eligible staff has increased since the start of the roll out of AE in 2012.

The report also shows more young people in their twenties are now saving into a pension - and that the gender gap in pension saving has been significantly reduced, with as many women as men now saving into a workplace pension.

However, we are not complacent and are focused on ensuring that employers continue to comply with their responsibilities and that start-up businesses taking on employees for the first time are clear about their legal duties towards them.

New businesses

Our research shows that the vast majority of new employers are successfully meeting their workplace pensions duties, however there are a minority who fail. HMRC supply us with RTI (real time information) data that we use to know whether an employer has taken on staff but failed to meet their workplace pensions duties and we will take action to ensure employers comply with their responsibilities.

Automatic enrolment duties start as soon as the business takes on their first member of staff. Employers must assess all new staff, write to them to tell them how automatic enrolment affects them and put them into a pension if they are eligible.
We have lots of easy to use information on our website tailored for people who may not have pensions experience. 

Included in our online guide for employers [2] is information on how to choose a pension scheme. Employers should ensure the pension scheme they choose is suitable for their staff - including checking which tax relief method the scheme uses.

Employers should ensure they keep their letter code to use in any communications with TPR. Businesses who receive a letter from us, but who do not employ staff, should let us know so that they are not sent further communications.

Ongoing duties

While most employers have systems and processes in place to successfully carry out their ongoing pensions duties, some employers do fail and we will take action. 

Ongoing duties include keeping accurate records, monitoring ages and earnings of staff, putting those who become eligible into a pension scheme and maintaining the correct pensions contributions. Our research shows most employers successfully implemented the changes to minimum contributions from 5% to 8% in April and that they found the overall process of completing their ongoing duties easier than they expected. More information about ongoing duties can be found on our website. [3]

Re-enrolment

As well as completing their ongoing duties, employers must also periodically complete re-enrolment, adding to the 250,000 employers which have already completed their re-declaration of compliance to confirm to us they have completed this task. This summer we will see a peak of 140,000 small and micro businesses that will reach their first re-enrolment dates.

Employers must complete re-enrolment every three years. They must choose a re-enrolment date which falls in the three months either side of the first anniversary of their staging date - which is the date their workplace pensions duties started.

Being able to pick a re-enrolment date means employers can choose a time which is suitable for them and aligns with their business processes. Usually, the easiest date to choose is the third anniversary of their staging date (or duties start date for new employers).

On their chosen re-enrolment date, employers must assess staff who opted out or left the scheme since they were enrolled, to check if they are still eligible.
If they are, they must be re-enrolled back into a pension scheme. Employers must inform these staff in writing that this has happened.

Employers must then complete and submit an online declaration of compliance form to confirm to TPR what they have done to meet their re-enrolment responsibilities. This must be done within five months of the third anniversary of their staging date regardless of the date the employer chooses as their re-enrolment date. Failure to carry out this task on time means employers are at risk of a fine.

Low opt out rates mean that the majority of employers will not have staff to re-enrol, however they must still complete their re-declaration to confirm they have checked whether they need to re-enrol any of their staff, even if none were re-enrolled.

We recently launched a new online re-enrolment tool [4] for employers which means they can quickly find out exactly what they need to do and take action to meet this duty.

Employers can seek help from a business adviser to help them with some or all of their re-enrolment tasks, although responsibility for complying with the law remains with them. 

Compliance and enforcement

Every quarter we publish our compliance and enforcement bulletin showing how many times we have used our powers.
The bulletin also includes anonymous examples of where we have used our powers so that employers can learn lessons and avoid the same mistakes.

Our most recent bulletin [5] gave the example of a large company which was handed a six figure fine for workplace pensions failings. Despite warnings from us, the employer, which has 5,000 staff, allowed an Escalating Penalty Notice to grow before correctly re-enrolling staff into the company pension scheme and paying the right contributions. 

The size of the fine is rare as most employers consider automatic enrolment to be an everyday part of running a business. However, this case is a stark warning to all employers - large and small - that failing to address problems early can lead to fines which could be avoided.

Recently published figures show we will take action to tackle non-compliance. In line with the numbers of employers with responsibilities, we used our powers 128,807 times in 2018/19 compared to 102,497 times the previous year. The use of our powers includes compliance notices, fixed penalties, escalating penalties and inspection notices.

Compliance validation checks

Earlier this year, we announced a new wave of short notice inspections, developing a programme which has been under way for nearly three years. It is mandatory for employers to take part in these inspections - obstruction of an inspector and failing to provide information when required to do so are criminal offences.

These compliance checks target employers we believe are flouting their automatic enrolment pension duties.

TPR is increasingly led by our data and intelligence streams which enable us to detect potential non-compliance and take swift action against individual employers. Using our information, we can pinpoint specific employers up and down the country who are suspected of breaking the law, including those who fail to put staff into a pension scheme or who make no, or incorrect, pension contributions.

Our research shows that 74% of inspections revealed breaches in pensions legislation with 76% of these resulting in enforcement action.

We know the vast majority of employers are doing the right thing for their staff, however the small minority who persistently ignore their responsibilities can expect a knock at the door from us and enforcement action.  

The inspections started in the summer and are ongoing across the UK. We also directly contact other employers suspected of non-compliance by phone to validate the information held related to them meeting their duties, to ensure they are complying fully.

Shape-shifting employers

Employers that try to dodge their workplace pension duties by changing their identity are also being targeted. 

There is nothing wrong with genuine rebranding - it can help refresh a business and define a new direction. However, a name change has no impact on your automatic enrolment duties - employers still have the same responsibilities towards their staff. 

While most employers do the right thing for their staff, TPR has identified a small minority of employers who could be trying to hide their non-compliance with the law by opening new businesses, transferring their workforce across and then dissolving the original businesses. The suspicion is that by changing their name, those involved hope to avoid having to pay the pension contributions due.

We've become aware of several employers that appear to have tried to conceal their failure to comply with the law by hiding behind a new name. A number of investigations are ongoing in cases involving scores of workers who have not been paid the pensions they are entitled to.