Regulator sets AE lesson with first non-compliance report

Auto-enrolment naysayers finally got their fix of medium-sized employers struggling with the reform, with the company eventually making up £108,000 in lost contributions for its monthly payroll, and £35,000 for its four weekly payroll. Its breaches were as follows:

• It failed to enrol members of the four-weekly payroll on time, auto-enrolling them a month late.
• It similarly failed to enrol some members of the monthly payroll on time, enrolling them three months late.
• It had not paid to the pension provider "a significant level of contributions" as a result of these breaches.

The company was introduced to the world of compliance notices, unpaid contribution notices and statutory inspections, and its representatives were reportedly "fully cooperative", even highlighting breaches themselves. But early industry reaction has questioned the regulator's apparent reliance on the company's calculations of its contributions shortfall.

More interesting are the reasons given by the employer as to where the issues arose, with that familiar culprit payroll at the centre of it:

Source: The Pensions Regulator

Dunelm has issued a press statement acknowledging its shortcomings and said it had been "open, forthcoming and fully cooperative" with the regulator, as well as reiterating some of these problems.

"The regulator has confirmed that we are now fully compliant with our automatic enrolment duties," the statement continued. "We have also reviewed our internal systems to ensure these issues do not happen again."

Early Twitter debate centred on why Dunelm was allowed to calculate its own contributions. In this case it revised the figure upwards, but pensions commentators questioned the principle of letting companies calculate their shortfalls.

@JosephineCumbo Surprised TPR didn't make their own calculations...letting the target come up with the figure seems rather odd.

— Simon Kew (@PensionsJackal) April 24, 2014

This surely represents the thin end of the wedge, with figures released in successive regulatory reports showing instances of non-compliance over just two months until the end of March this year almost equal to the number for the entirety of 2013.

Update: A spokesperson for the regulator said it may require employers to calculate the unpaid contributions, on the basis of scheme rules.

The spokesperson continued: "These employer calculations may be validated by the regulator and if necessary the employer will be required to produce evidence of their calculations. 

"Alternatively the regulator has the power to estimate the amount of unpaid contributions for them, this is based on a statutory formula."

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