Employers warned of tough approach from The Pensions Regulator 10 years after launch of auto enrolment

A change to workplace pensions which has caused sleepless nights for countless employers over the last 10 years is back on the agenda as the government looks to mop up the stragglers from the initial roll-out and also expand the scheme to more workers.

Freya Cross, Head of Business and Corporate at The Deep

Ben Stephenson of Hull-based Investment Technique said the government, in the guise of The Pensions Regulator (TPR), is planning to get tough with employers who have fallen foul of automatic enrolment, whether by missing deadlines or by making other errors.

TPR is continuing its campaign to raise awareness of the scheme, with employers facing escalating fines for non-compliance. At the same time the body is considering opening the service to more people by reducing the qualifying age from 22 to 18 and by abolishing the lower earnings limit for contributions.

Ben said: “Auto enrolment is generally viewed as a success given that the percentage of employees enrolled in a workplace pension increased from 41 to 86 between 2012 and 2021. In Yorkshire and Humber it was up from 39 to 85.

“But the government clearly wants to get more people signed up. The idea of extending eligibility has been under discussion for some time and pensions advisers are expecting to hear more about that from TPR in March. Fines were introduced in 2014 and the fact that they are still being imposed shows many businesses still don’t know their responsibilities.”

Auto enrolment was introduced in 2012 for firms with 250 or more pension scheme members. By 2016 all businesses with more than one person were required to join and had in theory been alerted by the unveiling in 2015 of a large, fluffy, two-horned, multi-coloured mascot as the face of TPR’s campaign. “Workie” appeared on billboards, in print publications and on TV to encourage small businesses to enrol their staff.

Workie was widely mocked in the media and during 2016 headed into retirement himself but last November TPR trumpeted the success of its campaign by revealing that in 2021 employees across the UK saved £114.6 billion into their pensions – a real terms increase of £32.9 billion compared to 2012.

However TPR also revealed it was taking further action against nearly 100 businesses which had paid fines of more than £250,000 between them and were still found to be non-compliant during the first half of 2022. At the same time TPR had secured court orders against more than 260 businesses in respect of unpaid fines.

Investment Technique, which was founded in 1996 and moved into The Deep Business Centre in 2001, specialises in financial planning and investment services for businesses and individuals and developed its auto enrolment expertise after identifying a need among clients.

Ben said: “When auto enrolment was launched TPR gave businesses a lot of leeway because not all were aware of the importance. Many left it to the last minute, and that might have been because they didn’t understand the issues around enrolling and opting out.

“We found that many employers just passed it to their accountants or payroll provider – but they weren’t always up to speed with it either. Employers come to us often because they think they are making a mess of it but they are unsure.

“Even after all this time we rarely come across a scheme where everything is right. Small errors left unnoticed over extended periods of time can accumulate into larger problems and become costly. As a business which offers a full workplace pensions service, not only setting up and running schemes but also providing health checks for existing employer schemes, we regularly come into contact with schemes making such mistakes and we help to put them right.

“We became involved as the scheme was being rolled out to small firms and we’re looking after clients with up to 100 employees in a variety of sectors. TPR will do spot checks and if they find errors in procedures or with the service provider they will expect the business to start putting things right, so the key is to get ahead of that.”

Freya Cross, Head of Business and Corporate at The Deep, said: “All the staff at The Deep have always benefited from being able to join a pension scheme and I have noticed a trend towards a great number of younger people taking up a pension. Some of them talk to me about the long term benefits they will get.

“Through my own business networks I’m aware that auto enrolment has been seen as a positive move and from our point of view as a business centre with more than 40 clients employing about 200 people between them it’s good to have this specialist knowledge under the same roof.

“If employers and employees want to know more about auto enrolment or other pensions issues they don’t have to go far.”