The Pensions Regulator (TPR) has begun carrying out employer spot checks to make sure employers are complying with their automatic enrolment duties and that they are giving their staff the workplace pensions they’re entitled to. According to the TPR, these inspections help them to understand any challenges employers are facing, and whether TPR needs to make any changes to their guidance. This also enables them to identify employers who fail to meet their duties, and take enforcement action where necessary.
TPR has confirmed that they will continue with their checks over the coming months generally sending a statutory notice to the employers they have selected ahead of their visits.
Get the process right
TPR are concerned that some employers are not following the correct procedures and during the course of their inspections have seen a number of instances of employers agreeing to opt staff out of a workplace pension before they have been enrolled. This is not in accordance with the auto enrolment rules. According to TPR:
‘Some employers claimed they were unaware as to the formality of their duties or process they needed to follow, and had simply been trying to do their staff a favour by offering them the option of opting out up front. But whether their motivation was genuine, or whether they were simply trying to get out of paying their staff the pension contributions they were due, the result was the same – they were in breach of their legal duties. Eligible staff need to be enrolled first, and can then opt out. One of the cornerstones of automatic enrolment is capitalising on inertia, and it has proved very successful so far in helping people who might never have saved for retirement before.’
Under pensions, auto-enrolment employers have to enrol qualifying employees into a workplace pension. Duties include paying contributions for the employee. The process of auto enrolment has been phased in from October 2012 when the largest employers had to comply with the rules. However the rules are set to change and new employers will have to comply with their automatic enrolment legal duties, as soon as they employ their first member of staff.
TPR guidance to advisors states:
‘If your client becomes an employer for the first time on or after 1 October 2017, they will immediately have legal duties for their new member of staff. These duties apply from the first day the first member of staff started working for your client. This is known as their duties start date. Your client must comply with their duties straight away.’
In contrast to the above rule, an employer who first pays an employee from 2 April 2017 onwards will have a staging date of January or February 2018 depending on when the first employee was paid.
Employers are generally able to postpone some of their auto-enrolment duties for up to three months but this needs to be dealt with correctly.
Please contact us for help with auto-enrolment.