Tougher approach to enforcement announced this week by the regulator
The value of fines handed down by the Pensions Regulator (TPR) has more than trebled in a year, according to global law firm Clyde & Co.
Data obtained directly from TPR shows that the total value of fines handed down in the year to 31 March 2018 reached £42m, up from £12.6m the previous year.
Of the 2017/18 total, £11.5m was handed down in fixed penalty notices and £30.5m in escalating penalty notices.
Mark Howard, Head of Pensions at Clyde & Co, comments: "The exponential rise in fines since the introduction of automatic-enrolment (AE) legislation is monumental."
"Even more concerning for employers is that TPR has just announced its new approach to regulation promising to be a quicker, more proactive and tougher regulator."
"Given that fines have already trebled in the last 12 months, this makes it critical for employers to fully get to grips with their pensions duties. It is now a core duty of any business with employees."
Clyde & Co explains that TPR can issue a fixed penalty of £400 for failing to enrol employees into a pension scheme. It can also take enforcement activity against employers that fail to comply with AE obligations with a compliance notice - an order to take steps to comply with the legislation. Failure to comply with that notice can also lead to a £400 fixed penalty notice. The next step for continued non-compliance is an escalating penalty notice for unpaid contributions, the fines for such notices vary depending on the size of the employer.
Howard adds: "The rise in value of the escalating penalties is staggering. These are daily penalties and so can rack up quickly. But employers really have only themselves to blame for receiving an escalating penalty as they are only issued if the employer has failed to respond to a previous statutory notice warning that it is non-compliant with its AE duties or has failed to provide the Regulator with information when requested."
"Burying your head in the sand is not sustainable approach. The longer the problem is ignored the worse it will get as the fines will continue to come through the letter box."
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