Consultants have called for increased efforts to break down the complexities of auto-enrolment for smaller employers as data from the Regulator revealed a sharp increase in non-compliance actions in the final three months of last year.
Figures from the Pension Regulator’s latest quarterly bulletin have revealed a steep increase in the number of compliance and fixed penalty notices served to employers.
Over the course of Q4 2014 the regulator issued 1,139 notices of non-compliance to employers failing to fulfil auto-enrolment technicalities on time. This was a significant jump from the 163 cases recorded during the third quarter.
There was also a steep increase in the number of employees served with fixed penalty notices increasing from three in Q3 to 166 in Q4.
A spokesperson from the regulator said an increase in non-compliant employers had been anticipated due to the high number of employers who staged during the period.
“By the end of Sept 2014, 33,660 employers had completed their declarations in the first two years of automatic enrolment,” said the Regulator spokesperson.
“By comparison, in just three months at the end of 2014, more than 12,000 further employers were expected to declare they had complied.”
Responding to the data, Adam Bexson, SME specialist at consultancy Barnett Waddingham, said he thought non-compliance was definitely becoming more of an issue.
“I hope those 1,139 non-compliance notices result in people putting things right. In the worse case scenario you could see a massive increase in the actual fines issued next quarter,” he said.
It’s important to keep the message up that there is some complexity in auto-enrolment
Mark Pemberthy, JLT
Non-compliance notices are issued as a preliminary warning to companies who fail to meet the regulator’s auto-enrolment requirements. Fixed penalty notices are served to employers who are wilfully non-compliant and fail to take responsive action to previous warnings.
Mark Pemberthy, executive director at JLT Employee Benefits, said he thought the regulator had been consistent in its approach to auto-enrolment compliance from the outset but was concerned about the upward trend.
“It’s important to keep the message up that there is some complexity in auto-enrolment – organisations need help or need to be thorough in how they approach addressing their duties,” said Pemberthy.
He added there was a lot of simultaneous activity for employers to contend with, and anticipated that introduction of the minimum quality standards for defined contribution schemes would have a disproportionate impact on smaller employers.
“We’ve got over half the DC schemes in the market who are over the charge cap, a significant proportion of those will be in the SME space. A lot of providers are still working through what that means in terms of post-April charges,” said Pemberthy.
Some providers may impose supplementary fees on schemes for smaller employers due to the squeeze on management charges, he added.
