During 2017, more than 700,000 small and micro employers will take up their new workplace-pensions duties as part of pensions autoenrolment.
It will be the largest wave of employers so far. By the end of the year, more than a million employers in total will have complied with the law. Along with the rising number of employers implementing automatic enrolment for their staff, growing numbers of larger employers are approaching their re-enrolment date. This is when they will be required to put certain staff who opted out back into a workplace pension.
We treat employers’ auto-enrolment duties seriously. It’s not fair that workers do not get the pension they are due in law if their employer is not compliant. It is estimated that ten million workers will begin saving as a result of automatic enrolment once implementation is complete. So far, more than seven million have already been enrolled, showing how successful the policy has been to date.
The Pensions Regulator’s quarterly Compliance and Enforcement bulletin, published in October, reported that the vast majority of employers have successfully complied with their workplace-pensions duties and are doing the right thing by their staff. But, as more and more employers reach their staging dates, it is no surprise that we at the Pensions Regulator are seeing a rise in our enforcement activity and the number of compliance notices and penalties issued to employers.
Around 3,700 fixed penalty notices were issued between July and September last year and our use of escalating penalty notices has also increased. But, despite these increases, the number of penalties is very small relative to the number of employers reaching their staging dates. In a huge majority of cases, compliance notices do not progress to a financial penalty, showing that most of the small minority of employers that become non-compliant only need a nudge to get them back on track.
We know that most employers want to do the right thing by their staff, and we are committed to helping them to understand and fulfil their duties by providing them and their advisers with the tools to get on with automatic enrolment.
Be clear on your obligations
Employers may seek help from you with some or all of their duties. It is important that you and your clients are clear about who is carrying out which task. Some employers have become non-compliant simply because they neglected to check who’s doing what. For the most part, though, employers become non-compliant because they fail to leave enough time to get their plans in place, and miss their deadlines.
Urging your clients to start planning early will help them to avoid this risk. Our focus is to educate and enable employers. We write to all employers five times in the lead-up to their duties beginning, and email them if they choose this option. Our tools are designed to provide simple, step-by-step help to enable employers to get everything right. As an accountant, you may wish to remind your clients to look out for our letters and to use our tools.
Auto-enrolment has been a journey that has taken us from working with the country’s largest employers, as they got to grips with implementing the changes among complex workforces, to providing simple tools to help someone who employs just one person to meet their duties. My colleagues and I look forward to working with AAT during the year ahead, to help you to assist your clients in meeting their duties.
Charles Counsell is executive director for automatic enrolment at the Pensions Regulator. He will deliver a talk on the latest developments in auto-enrolment at the Annual Conference in June. Get your early bird tickets now.
Charles Counsell is AAT Comment’s news writer.