DM2777032 v8J These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Industry liaison team.

DM2777032 v8J These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.

Industry liaison team

August 2015

Automatic enrolment

Compliance and enforcement

The information we provide is for guidance only and should not be taken as a definitive interpretation of the law.

Information for business

advisers


• As a society we are living longer, healthier lives.

• There are currently four people of working age for every pensioner by 2050 there will be just two.

• Millions of people are under-saving for their retirement.

• Only 1 in 3 private sector workers were in a pension scheme in 2012 and the trend has been downwards for the last 40 years.

• The reforms being introduced now will help millions of individuals to save more (or save for the first time) for their retirement.

Why automatic enrolment is needed


What’s happened so far …

• As at the end of July 2015

• 54,224 employers have completed their declaration of compliance,

• covering over 20m workers, of which:

• 9.3m (46%) were already in a qualifying scheme;

• 5.4m people (27%) were automatically enrolled;

• 427k (2%) workers had the transitional period applied;

• and 5.2m (26%) were ‘none of the above’.


Intelligence

% of intelligence referrals 1 April 2014 to 31 March 2015

Source: The Pensions Regulator Automatic enrolment: commentary and analysis 2015

The intelligence channels that support our compliance work.

DM 2777032 v8J These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.

• Some of our powers used (to 30 June 2015):

– 36 information notices

– 13 statutory inspection notices

– 1,295 compliance notices

– 71 unpaid contribution notices

– 332 fixed penalty notices

– 4 escalating penalty notices

• We expect to see an increase in how often we need to use our powers with the mass market roll out of automatic enrolment to large numbers of small businesses.

• Our research shows that the majority of employers who have completed the automatic enrolment process regret not allowing more time.

Use of powers

3,303 cases closed by 30 June 2015


Staging profile

Q1 - April to JuneQ2 - July to SeptQ3 - Oct to DecQ4 - Jan to March


Investigations Outcome of the 2,082 closed cases April 2014 to March 2015

Source: The Pensions Regulator Automatic enrolment: commentary and analysis 2015


Lessons learnt

Source: The Pensions Regulator Automatic enrolment: commentary and analysis 2015Automatic enrolment: compliance and enforcement bulletin April-June 2015.


Which workers should be considered?:

• It is not just employees who come under automatic enrolment (AE). Even someone considered self employed may not be excluded from the AE duties.

• If a “personal” contract of work or services exists and the individual is not providing the work as part of their own business, then they would be considered a worker.

• Fixed term, ‘casual’ or non-permanent workers should be assessed under the same criteria as other workers.

• Zero hours contract workers are a category of worker employers will need to consider as part of their employer duties.

Postponement can be used to ease the process (eg for short-term workers):• but workers must be issued a postponement notice, within six weeks from the

start of postponement, or postponement cannot be used; and

• the staging date remains unchanged.

Compliance issues among employers - i


Opting-in and out:• All eligible jobholders must be automatically enrolled before they can exercise

their right to opt-out. • Employers must take immediate steps to establish the worker’s enrolment

date, upon receipt of a valid Opt-in notice, as they may need to start taking deductions from the next pay day.

Reassessing eligibility:• Employers must assess workers, who have not previously been eligible, at

each pay reference period to see if the eligibility criteria is triggered.• Those who have already been automatically enrolled once - or have been an

active member of a pension scheme - and have then opted out or ceased membership, should be left until re-enrolment.

• Staff who earn less than £10,000 a year, will still need to be automatically enrolled if they earn over the threshold for their pay reference period - for example, over £192 for weekly or over £833 for monthly paid workers.

Compliance issues among employers - ii


What if an employer makes a mistake and fails to carry out their duties?

Tell the Regulator about the breach. TPR’s approach is an employer:

• should take reasonable steps to put the worker back in the position they would have been in if compliance had occurred on time, and

• should not profit from their mistake

That means the employer should:

• enrol them, backdated to the original date, and

• ensure backdated employer pension contributions are paid, and

• ensure backdated employee pension contributions are collected

If TPR decides to take formal action against the employer and the worker should

have been enrolled more than 3 months ago, TPR has the power to:

• require the employer to pay both their own and employee contributions, and

• require interest to be added to outstanding contributions

Remedying a breach


Our approach:

• To educate and enable employers to help them comply.

• We want employers to contact us if they are experiencing difficulties.

If an employer chooses to ignore their duties - this is unacceptable and statutory notices and £400 fixed penalty fines can be issued for non-compliance, including:

• failing to complete a declaration of compliance.

We recommend employers (or their advisors) should:• not leave it to the last moment - thousands of employers may be in the queue!• plan to have a pension (if they have eligible workers) and suitable software

ready 6 months before staging• ensure software is fit for purpose (eg can send data to pension provider)• cleanse employee data, and test the payroll / AE software, preferably before

staging.

Summary


Failure to comply by an employer – escalating penalties

Number of persons Prescribed (calendar) daily rate (£)

1-4 50

5-49 500

50-249 2,500

250-499 5,000

500 or more 10,000


Prohibited recruitment conduct (s50/s51)

Number persons Fixed penalty (£)

1-4 1,000

5-49 1,500

50-249 2,500

250-or more 5,000


We are here to help!

Request a guest speaker:https://secure.thepensionsregulator.gov.uk/speaker-request.aspx

Contact us at:www.tpr.gov.uk/contact-us.aspx

Subscribe to our news by email:https://forms.thepensionsregulator.gov.uk/subscribe.aspx

For a full list of all our research and analysis:

www.tpr.gov.uk/doc-library/research-analysis.aspx

Thank you

The information we provide is for guidance only and should not be taken as a definitive interpretation of the law.

DM2777032 v8J These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Industry liaison team.

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