Auto Enrolment Penalties

Auto enrolment penalties can hit employers with fines in excess of £10,000.

To avoid Auto enrolment penalties, there are several duties employers must undertake to avoid such penalties. Even if there are no eligible job holders, certain steps are needed to be followed.

The responsibility of auto enrolment rests with the individual employer even if you outsource your payroll. If you fail to comply the Pensions Regulator (TPR) will act.

If an employer chooses to ignore their automatic enrolment duties. The TPR will take enforcement action with auto enrolment penalties, such as statutory notices. As an example for a first time breach in the areas of non-compliance of duties or unpaid contributions or not registering with the Regulator. Continued non-compliance may lead to court action.

In genuine circumstances, where the employer genuinely did not understand their duties or due to unforeseen circumstances have not been able to comply, TPR will work with the employer to ensure compliance. Such action would normally start with statutory notices, this will then be followed by financial penalty notices and continued non-compliance may lead to court action. At the end of the day it is in the TPRs best interest to work with employers to make sure they understand their employer duties.

The Pensions Regulator they are trying to focus on a “carrot approach” (guidance, education and support) rather than imposing the “stick approach” to Auto enrolment penalties).  Basically they are looking to help companies who are trying to achieve compliance, but they have significant powers to take action against employers who wilfully fail to carry out their duties. As an example this could be for first time breach in the areas of non-compliance of duties or unpaid contributions or not registering with the Regulator.

Enforcement Action

The Pensions Regulator will investigate willful and non-willful non-compliance. They are within their rights to carry out inspections and request certain information from employers. TPR will enforce non-compliance in a number of ways:

  • Informal action;
  • Statutory notice;
  • Penalty notice;
  • Escalating penalty notice;
  •  Civil penalty notice;
  • Prohibited recruitment conduct penalty notice.

Receiving Auto Enrolment Penalties

Firstly, it is very important to pay the penalty by the date specified on the notice, as failure to pay will result in the regulator bringing more formal proceedings including legal action through the courts if need be, which could result in a criminal prosecution. Employers can pay their penalties using TPR’s online payment service.

Avoid Auto Enrolment Penalties & a criminal prosecution

Our first tip would be to ensure that you are full understand and prepared for your automatic enrolment duties. It would be advisable to check that your current payroll system is compatible with your chosen pension scheme.

Still unsure of your responsibilities under Auto Enrolment, why not give our team a call or contact us, for free plan speaking and initial advice.

Request your free Review Meeting (either online or at our office) by using our contact page, and someone will respond within 1 working day.

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