Employers Failing to Understand their Automatic Enrolment Duties

The Pension Regulator has recently published it latest quarterly bulletin which shows that employers are failing to understand their automatic enrolment duties.auto enrolment

It seems that the Pension Regulator has found that many employers assume their duties only relate to staff who are eligible to automatically enrol according to age and salary criteria.  This is incorrect as staff who have the right to join or opt in must be included in the automatic enrolment process.

The Pension Regulator found one employer who was using a master trust and had misunderstood the role of the scheme and had assumed that the scheme would be responsible for calculating contributions and making the correct staff deductions. This is a fundamental error and one that leads to a hefty fine for failing to comply correctly to automatic enrolment regulations and attracts the highest number of fines.

The Pension Regulator lists the various offences that employers can be fined for:

Information Notice – The power to demand information and documents under section 72 of the Pensions Act 2004.

Inspection – The power to inspect premises under section 74 of the Pensions Act 2004

Warrant – The power to search premises and take possession of content under section 78 of the Pensions Act 2004

Compliance Notice – A Compliance Notice under section 35 of the Pensions Act 2008 The power to remedy a contravention of one or more automatic enrolment employer duty provisions

Unpaid Contributions Notice – An Unpaid Contributions Notice under section 37 of the Pensions Act 2008 to remedy a late or non-payment due to a qualifying pension scheme

Fixed Penalty Notice – A Fixed Penalty Notice under section 40 of the Pensions Act 2008 of £400 for failure to comply with a statutory notice or some specific employer duties

Escalating Penalty Notice  -An escalating penalty under section 41 of the Pensions Act 2008 of between £50 and £10,000 per day (depending on size) for failure to comply with a statutory notice

Employers who don’t understand what their compliance duties fully entail should take advice from an advisor who fully understand what needs to be done.  Pension Regulator research has shown that accountants and book keepers have the lowest  level of understanding out of all the available intermediaries.

When seeking advice and support, an employer should understand exactly what they are getting for their money whether it is just advice or a full automatic enrolment service.  Both parties should be clear on the responsibilities for each task in the automatic enrolment process.