Last updated: 24 Nov 2020 12:14 Posted in: AIA
Our members are busier than ever, with clients relying on their advisers to provide them with step by step guidance on the evolving business support schemes. And as we continue to face the unfamiliar, it has never been more important to keep protecting pensions.
Staff should not miss out on a pension because their employer failed to meet their duties. Make sure that your clients are aware they continue to have automatic enrolment duties.
More than ever, business advisers should ensure they are on top of the facts so they can confidently provide the right help and support for their clients.
The Pensions Regulator (TPR) expect any missed contributions to be paid over to pension schemes, and then invested as promised to help deliver the retirement outcomes people expect. TPR are monitoring pensions closely and will take enforcement action where an employer is not complying with their legal duties.
In one example, TPR followed up a report that a major global restaurant operator had not paid across £45,000 in missing staff contributions for its UK business. The payment has now been made and contributions remain ongoing. In another example, TPR investigated a whistleblower report that contributions were not being made by a scaffolding firm amounting to £90k on behalf of 100 savers – the firm has now committed to making up the shortfall with their pension provider.
TPR know from experience that the risk of a fine is often enough to resolve a report of late contributions. Encouragingly, on-time compliance rates for employers declaring that they have implemented automatic enrolment for the first time, as well as those undertaking three yearly re-enrolment, has held steady, including among those who received compliance notices.
AIA Director of Operations, David Potts said: “Many businesses are facing unprecedent challenges through the economic uncertainty of Covid19 and Brexit, but their pension obligations remain the same. AIA members should be reading the latest guidance and make their clients aware that they must continue to meet their automatic enrolment responsibilities.”
The vast majority of employers are continuing to meet their automatic enrolment responsibilities - including setting up a pension scheme and enrolling staff into it.
Every three years employers must also assess staff and put those who opted out, back into a pension and our information shows again that employers continue to do this successfully. Re-enrolment also provides those who chose to opt out previously, a good opportunity to reassess their decision and re-engage with saving for their retirement.
A common question business advisers may be receiving from struggling clients is, what happens if I don’t comply? The answer is simply, that they run a high risk of enforcement action, including an initial £400 fixed penalty which could then increase to a daily escalating penalty for those employers who still do not comply with their duties. The size of the escalating fine depends on the size of the employer and is £50 per day for small businesses and up to £10,000 per day for larger businesses. TPR want to stop employers from reaching this point.
Automatic enrolment duties have not changed, and employers must comply as normal.
More time is needed to judge the ultimate impact of the pandemic on saving. We know employers will continue to face challenges and we are continuing to respond to the evolving situation. We are keeping our approach and guidance under review, but our message is clear. We will take the right action at the right time to support employers and ensure savers are protected.
Useful links
Many businesses are facing unprecedent challenges through the economic uncertainty of Covid19 and Brexit, but their pension obligations remain the same. AIA members should be reading the latest guidance and make their clients aware that they must continue to meet their automatic enrolment responsibilities
