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Pension auto-enrolment penalties

Automatic enrolment into workplace pensions has been rolling out across the UK since 2012 beginning with the largest employers in the country. The first batch of small and micro employers started to enrol in the scheme in mid-2015. There are estimated to be 1.8 million small and micro employers in the UK.  It is expected that all employers will be part of the scheme by early 2018.Employers failing to comply with their auto-enrolment duties and missing their staging date can trigger statutory notices, fixed penalties and even court action. Staging dates are based on the size of an employer’s PAYE scheme as at 1 April 2012. Most small and micro employers will commence the process between 1 June 2015 and 1 April 2017.The Pensions Regulator has recently published a report on Automatic enrolment – Compliance and enforcement for the last quarter of 2016. The report highlights the fact that some employers have now received County Court Judgements (CCJs) for a failure to pay their automatic enrolment fines. This can happen when the employer persistently ignores the penalty notices sent to them. There has also been an increase in the number of people appealing their fines at Tribunal and to date no employer has been able to show that they had a reasonable excuse for failing to comply. In the last quarter of 2016, 870 Escalating Penalty Notices (EPNs) and 2,919 Fixed Penalty Notices (FPNs) were issued by the Pensions Regulator. This brought the total number issued to date to 1,477 EPNs and 9,831 FPNs.For some time we have been urging small employers to check their staging date and ensure they are properly prepared to be able to offer their staff a pension scheme in a timely manner in order to meet the necessary requirements and avoid penalties. This report from the Pensions Regulator should give slow acting employers a further impetus to bring their compliance processes up to date.