On the go: One in 20 employees are being short-changed by their employer and are not receiving the pension they are due, research has found.
A report into auto-enrolment enforcement by the think-tank Resolution Foundation, published on Thursday, estimates than more than 800,000 workers eligible to receive a workplace pension have either not been enrolled by their employer, or are receiving contributions below the minimum level.
The report warned that many may be unaware that they will be short-changed in the future, as failure to abide by auto-enrolment rules does not leave workers out of pocket in terms of take-home pay.
In addition, the think-tank found part-time and temporary workers were more than twice as likely not to be in a workplace pension than their full-time and permanent counterparts, and more than one-10th of agency workers have not been auto-enrolled.
According to the Resolution Foundation, non-enrolment is 2.4 times as prevalent as underpayment, with the Pensions Regulator having issued 2.8 times as many compliance notices — which primarily target non-enrolment — as unpaid contribution notices in 2019.
Hannah Slaughter, the report’s author, said: “Especially considering that compliance notices can be issued for other reasons than non-enrolment, these two ratios are reassuringly similar. TPR appears to be striking the right balance between the two sides of the enforcement coin.”
But Ms Slaughter urged TPR to undertake “more proactive enforcement”.
To do this, the think-tank said the regulator should focus on monitoring small businesses, contingent and low-paid workers, and sectors such as hospitality and agriculture where non-compliance was most prevalent.
At the beginning of the coronavirus crisis, there were concerns that many employees would choose to opt-out of their workplace pensions or reduce their contribution levels, effectively reducing their retirement funds. To avoid this, TPR warned employers against encouraging savers to opt out of auto-enrolment.
The watchdog also introduced flexibilities to help employers navigate the challenges of Covid-19, taking a pragmatic approach to enforcement in light of cash flow issues for employers and to reduce the burden on administrators in the early days of the crisis.
In light of this, TPR registered a 55 per cent fall in the use of its powers between April and June this year when compared with the previous quarter, according to its compliance and enforcement bulletin published on Thursday.
Contradicting the think-tank’s research, the regulator stated that it has to date not seen a significant or unusual spike in missed pension contributions and the vast majority of employers are meeting their auto-enrolment duties.
“As Covid-19 easements begin to be lifted, TPR is now also returning to normal levels of enforcement activity,” it stated.
This article originally appeared on ftadviser.com
