Automatic enrolment is a hot topic. Starting with the largest in October 2012, employers will be obliged to enrol most of their employees into a pension scheme and to pay money towards their pension
Automatic enrolment is a hot topic. Starting with the largest in October 2012, employers will be obliged to enrol most of their employees into a pension scheme and to pay money towards their pension (click here to view the staging dates). This is the first time that the UK will have had compulsory pensions in this way and the Department for Work and Pensions estimates that it will result in between 5 and 8 million people newly saving or saving more in workplace pensions, with extra contributions of £9 billion annually from 2020.
The Brighton-based Pensions Regulator has the tricky job of enforcing these rules on employers, many of whom will have had no contributory pension for their staff before. The Regulator has now published its approach to delivering successful automatic enrolment. In its own words, it has a key role, working with all parties involved, to make automatic enrolment a success.
Its stated aims are to maximise compliance by employers with their automatic enrolment duties (through the Regulator's "Educate, Enable and Enforce" approach) and encourage those providing workplace pensions to supply safe, durable and value for money vehicles. And it has developed five strategic principles which will provide the framework for its regulatory approach, policies and practices.
The Regulator has indicated that it will take a graduated approach to enforcement, which may involve using warnings, notices or penalties. Criminal prosecution will be used in the most serious cases, for example wilful failure to auto-enrol. A person guilty of an offence may be liable to imprisonment for up to two years or a fine or both.
While the Regulator's intentions are good, this approach is somewhat surprising given that in 2000, the old pensions legislation was changed so almost all breaches had penalties under civil law, specifically to remove the burden of carrying out intensive investigations. It remains to be seen whether the Regulator will have sufficient resources to identify serious cases before investigating (a very difficult chicken and egg situation) and then collect evidence to a criminal standard to successfully prosecute cases. Look out for further information from the Regulator on its compliance and enforcement strategy this spring.
Given the Regulator's guidance and the forthcoming staging process, it is vital that employers use the coming months to prepare for automatic enrolment and the many challenges that it will bring. We are holding interactive workshops on compulsory pensions on 21 March 2012 (London) and 22 March 2012 (Manchester). If you would like to attend one of these workshops, please click here to register your interest.
The Brighton-based Pensions Regulator has the tricky job of enforcing these rules on employers, many of whom will have had no contributory pension for their staff before. The Regulator has now published its approach to delivering successful automatic enrolment. In its own words, it has a key role, working with all parties involved, to make automatic enrolment a success.
Its stated aims are to maximise compliance by employers with their automatic enrolment duties (through the Regulator's "Educate, Enable and Enforce" approach) and encourage those providing workplace pensions to supply safe, durable and value for money vehicles. And it has developed five strategic principles which will provide the framework for its regulatory approach, policies and practices.
The Regulator has indicated that it will take a graduated approach to enforcement, which may involve using warnings, notices or penalties. Criminal prosecution will be used in the most serious cases, for example wilful failure to auto-enrol. A person guilty of an offence may be liable to imprisonment for up to two years or a fine or both.
While the Regulator's intentions are good, this approach is somewhat surprising given that in 2000, the old pensions legislation was changed so almost all breaches had penalties under civil law, specifically to remove the burden of carrying out intensive investigations. It remains to be seen whether the Regulator will have sufficient resources to identify serious cases before investigating (a very difficult chicken and egg situation) and then collect evidence to a criminal standard to successfully prosecute cases. Look out for further information from the Regulator on its compliance and enforcement strategy this spring.
Given the Regulator's guidance and the forthcoming staging process, it is vital that employers use the coming months to prepare for automatic enrolment and the many challenges that it will bring. We are holding interactive workshops on compulsory pensions on 21 March 2012 (London) and 22 March 2012 (Manchester). If you would like to attend one of these workshops, please click here to register your interest.