Businesses need to take action on auto enrolment

Around half of all businesses who have complied with their pension’s duties have said they wished they had left more time to prepare.  Executive director of automatic enrolment Charles Counsell is now calling on small and micro employers to learn from their experience and avoid a last minute rush. 

“Currently around half of micro employers and 20% small employers are not clear about when they will need to act.  To help employers avoid the mistake of failing to prepare on time, The Pensions Regulator is sending out letters to alert all employers to when their automatic enrolment duties start.

The letters will alert employers to their staging date, which is when an employer’s legal duty is switched on.  They will arrive over the coming months and also ask employers to nominate a contact.  This is so that the regulator can email them important information about what they will need to do to comply.

Compliance and enforcement

Charles Counsell The Pensions RegulatorAs part of the regulator’s educate and enable approach we regularly update  our communications, including refreshing our website to make it more user friendly for small and micro businesses. Alongside our communications however, our compliance and enforcement team works to identify non compliance and will take action where an employer is at risk of failing to meet their duties.

Last month, the regulator published its quarterly declaration of compliance bulletin which showed the number of times we have used our powers to tackle non compliance.  As expected, the use of our powers has risen significantly as the numbers of employers needing to comply increases and the employer type changes.  There are those who, despite our message to prepare early, leave it too late or do not prepare at all.  We want to work to enable employers to meet their duties, but deliberate non compliance will not be tolerated and employers who fail risk financial penalty.  We want to ensure that workers get the pension contributions that they are entitled to.

Declaration of compliance

With the aim of helping small employers learn from others and avoid non compliance, the bulletin also highlights the main reasons why we have needed to use our powers.  One of the main ways some employers were caught out was because they failed to meet their declaration of compliance deadline.   The declaration of compliance must be completed five months after the staging date.

Steps towards compliance

Employers should start planning for automatic enrolment 12 months before their staging date.  They will need to ensure all their staff records are up to date and have a pension scheme in place six months beforehand.  They should also ensure their payroll solution has the capability to carry out automatic enrolment processes and is compatible with other systems. The way to ensure this is to test systems well in advance of the date they will  need to be ready.

The roll out of automatic enrolment has so far been successful with the majority of  employers meeting their automatic enrolment duties without the need for us to use our statutory powers.  Our research also shows us that most employers want to do the right thing by their staff.  My message to small and micro employers is to keep an eye out for the letter from us and to take action.”

To find out more about auto enrolment and what to do if you’ve missed your staging date visit our workplace pension area that’s packed full of information on what happens after your staging date to how to set up a pension scheme and more.

  • Corey Lavender

    Sending out letters to employers is fine, but what they really need is for the ridiculous level of pointless admin AE creates, to be reduced. Plus maybe making all Pension companies use the same uploading templates would help. Then when you finally get the scheme up and running, you set it up on your payroll system and get the report you’ve uploaded to the pension company accepted…….you still have to fill in the compliance questions or you’ll be fined.
    In theory I’m a fan of AE as I accept something needs to be done, but why in the UK we make things more complicated than they need to be, I’ll never know. Makes me want to quit payroll