The number of UK employers fined by The Pensions Regulator (TPR) for auto-enrolment errors has risen by 144% over the last year.
According to law firm EMW, 35,810 companies were fined for making such mistakes in 2017/18, compared with 14,650 in 2016/17. Total fines hit £42 million (US$53.6 million) in 2017/18, up more than threefold from £12.6 million (US$16.1 million) in 2016/17.
EMW said the rise in the number of fines was partly due to an expansion of the auto-enrolment pension regime to cover small businesses of fewer than 50 employees. Prior to these changes, only large and medium-sized employers were required to auto-enrol staff into a pension scheme.
The law firm added that schemes’ current complexity meant that smaller businesses without in-house HR functions were at risk of making errors when attempting to auto-enrol staff. In other words, the increase in fines did not necessarily mean that employers were deliberately avoiding auto-enrolling them.
Jon Taylor, principal and head of EMW’s employment team, told HR Magazine that the findings indicated small businesses were struggling to cope.
“The sharp rise in the number of fines suggests that SMEs [small to medium enterprises] are having real problems keeping on top of complex auto-enrolment schemes," he said. "While larger businesses will have the necessary infrastructure and expertise to correctly auto-enrol workers, the same does not always apply to smaller businesses.”
A common problem for SMEs was poor record-keeping, which led to smaller businesses being fined for something as simple as not providing regular updates to TPR, Taylor added.
As a result, he called on the TPR to consider revising fees for smaller businesses: “Considering the huge number of businesses now being caught by fines, perhaps The Pensions Regulator needs to consider moderating the scale of the fees, especially for SMEs,” Taylor said.
The findings coincide with a ban coming into force on companies making nuisance calls about pensions. Some 10.9 million unsolicited pension calls and messages are made each year, according to the Citizens Advice charity. Any firm found flouting the rules now faces a fine of up to £500,000 (US$638,200). It is thought that freedoms introduced for UK pension holders in April 2015 are a significant factor behind pension scams.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
OTHER STORIES THAT MAY INTEREST YOU
Pension scheme newsletter December 2018
The number of UK employers fined by The Pensions Regulator (TPR) for auto-enrolment errors has risen by 144% over the last year.
According to law firm EMW, 35,810 companies were fined for making such mistakes in 2017/18, compared with 14,650 in 2016/17. Total fines hit £42 million (US$53.6 million) in 2017/18, up more than threefold from £12.6 million (US$16.1 million) in 2016/17.
EMW said the rise in the number of fines was partly due to an expansion of the auto-enrolment pension regime to cover small businesses of fewer than 50 employees. Prior to these changes, only large and medium-sized employers were required to auto-enrol staff into a pension scheme.
The law firm added that schemes’ current complexity meant that smaller businesses without in-house HR functions were at risk of making errors when attempting to auto-enrol staff. In other words, the increase in fines did not necessarily mean that employers were deliberately avoiding auto-enrolling them.
Jon Taylor, principal and head of EMW’s employment team, told HR Magazine that the findings indicated small businesses were struggling to cope.
“The sharp rise in the number of fines suggests that SMEs [small to medium enterprises] are having real problems keeping on top of complex auto-enrolment schemes," he said. "While larger businesses will have the necessary infrastructure and expertise to correctly auto-enrol workers, the same does not always apply to smaller businesses.”
A common problem for SMEs was poor record-keeping, which led to smaller businesses being fined for something as simple as not providing regular updates to TPR, Taylor added.
As a result, he called on the TPR to consider revising fees for smaller businesses: “Considering the huge number of businesses now being caught by fines, perhaps The Pensions Regulator needs to consider moderating the scale of the fees, especially for SMEs,” Taylor said.
The findings coincide with a ban coming into force on companies making nuisance calls about pensions. Some 10.9 million unsolicited pension calls and messages are made each year, according to the Citizens Advice charity. Any firm found flouting the rules now faces a fine of up to £500,000 (US$638,200). It is thought that freedoms introduced for UK pension holders in April 2015 are a significant factor behind pension scams.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
OTHER STORIES THAT MAY INTEREST YOU
Pension scheme newsletter December 2018
