Firms must get ahead of Pensions Regulator auto enrolment crackdown: Ben Stephenson

Some businesses have progressed smoothly and successfully, others continue to encounter problems.

Millions of people have joined workplace pension schemes since auto enrolment was introduced, but MoneysavingExpert says there are still six million people who haven’t.

What they and, more importantly, their employers need to know is that the government hasn’t given up.

There are signs that The Pensions Regulator (TPR), is planning to get tough once again with employers who have fallen foul of automatic enrolment.

When the system was originally rolled out from autumn 2012 TPR gave businesses a lot of leeway. But fines were introduced in 2014 for breaches of the system and the fact they are still being imposed shows many businesses still don’t know their responsibilities.

We found that many employers passed it to their accountants or payroll provider – but they weren’t always up to speed with it either. Even after all this time we rarely come across a scheme where everything is right.

Further expansion is imminent. Plans to extend eligibility have been under discussion for some time and pensions advisers expect to hear more from TPR in March.

Options aired include lowering the qualifying age from 22 to 18, starting contributions from the first £1 earned instead of a minimum £10,000, and extending the scheme to cover the self-employed.

Many employers will remember the campaign by TPR in 2015 with a large, fluffy, multi-coloured mascot. “Workie” appeared on billboards, in print and on TV to encourage small businesses to enrol their staff.

Workie was widely mocked in the media and during 2016 headed into retirement himself but last November TPR trumpeted the success of its campaign by revealing that in 2021 UK employees saved £114.6 billion into their pensions – a real terms increase of £32.9 billion compared to 2012.

However TPR also revealed it was taking further action against nearly 100 businesses which had paid fines of more than £250,000 between them and were still found to be non-compliant during the first half of 2022.

At the same time TPR had secured court orders against more than 260 businesses over unpaid fines.

Recent data is shaky because of the impact of Covid on the workforce but the Office of National Statistics reports that workplace pension participation in the private sector during 2021 had climbed to 75 per cent compared with 32 per cent in 2012.

The approach of offering a carrot to workers by highlighting the benefits of a pension, coupled with applying a stick to failing employers, would appear to be working. But there is more to come.

TPR will do spot checks and if they find errors they will expect the business to start putting things right, so the key is to get ahead of that.

Ben Stephenson is an Independent Financial Adviser at Investment Technique, based at The Deep Business Centre in Hull.