Employers face auto-enrolment spot-checks

Business owners that employ staff who are eligible for workplace pensions face random spot-checks by the Pensions Regulator this summer.

Employers that provide details to HMRC are having their details cross-referenced by the watchdog in an attempt to identify non-compliance with auto-enrolment.

The checks hope to identify businesses that fail to enrol eligible workers into a workplace pension scheme or that make incorrect, or no, contributions.

The Pensions Regulator said its "data and intelligence streams enable it to detect potential non-compliance and take swift action against individual employers".

Darren Ryder, director of auto-enrolment at the Pensions Regulator, said:

"This allows us to target our resources in a very focused way as part of our role to protect pension savers.

"We know the vast majority of employers are doing the right thing for their staff, however, there are a small minority who persistently ignore their responsibilities.

"They can expect a knock at the door from us and enforcement action."

Regulator steps up crackdown

A Freedom of Information request showed the total amount of fines issued by the Pensions Regulator increased in each of the last five years.

According to the watchdog's most recent report, 21,732 auto-enrolment cases were closed in the first three months of 2019.

Those cases helped fetch more than £68 million in 2018/19, with around £14.9m coming from fixed penalty notices and £53.8m from escalating penalty notices.

The number of fines being issued to non-compliant employers is on the rise, although that is down to more businesses declaring their compliance.

What the Regulator looks for

All businesses have to auto-enrol staff who earn more than £10,000 a year into a workplace pension, if they are aged between 22 and state pension age.

Those who fail to comply with the legislation may be the subject of short-notice inspections, which began in May 2019 and will continue throughout the summer.

It also looks for employers who may be colluding to encourage workers to opt-out of their workplace pension after minimum contributions rates increased in April.

In October 2018, a recruitment agency in Derby was slapped with a record fine of £280,000 after plotting to illegally opt workers out of their pension scheme.

The agency's two owners and directors each received four-month prison sentences suspended for two years, and 200 hours of community service.

What to expect from a spot-check

According to the Pensions Regulator's most recent statistics in April 2019, more than 1.49m employers in the UK are complying with workplace pensions legislation.

For those who are not, however, legislation compels employers to take part in the spot-checks if an inspector comes knocking.

Employers are also obliged to provide information when requested, and allow officials to complete their investigation without interference.

Failure to provide information when required, or obstructing an inspector, are criminal offences and may result in legal action or fines.

Non-compliance penalties

Fixed penalty notices are generally given to employers that fail to comply with statutory notices for auto-enrolment, and are set at a value of £400.

Escalating penalty notices (EPNs) do what they say on the tin: they are issued when employers continually fail to comply with the rules after an initial warning.

EPNs can vary between a daily rate of £50 and £10,000, depending on the number of staff in the business.

We can ensure auto-enrolment compliance.