Lessons to be learnt from TPR fines
With the fines recently being announced by The Pensions Regulator (TPR) increasing from just three to 169, it is hoped that those that are yet to stage are taking note of the lessons learned. Completing your declaration of compliance accurately and on time, preparing early for auto enrolment and taking a more proactive view to the workplace pension reform.
Lets have a quick reminder of the facts:
- 1,139 compliance notices were issued to employers in Q3, making a total of 1,316 since July 2012
- 166 penalty notices were issued to employers in Q3 of £400 for non-compliance of auto enrolment duties, making a total of 169
- Fortunately, 0 escalated penalty notices have been issued to date which would see employers paying up to £10,000 per day
So what can we learn from this?
The fines are in place to encourage businesses to comply with their auto enrolment duties in a timely and organised fashion. With such a huge undertaking, it is very important that employers stick to their staging dates. This is why TPR recommend that you start your preparation early for auto enrolment. Preparing early allows you to ensure that your payroll software is compatible with auto enrolment and when your staging date arrives, you do not have any unforeseen problems.
One thing that some businesses do not seem to realise is that if you miss your staging date, not only do you receive a penalty from TPR of £400, but you also could then incur a fine of up to £10,000 per day of non-compliance (dependant on the size of the business).
In addition to this, your auto enrolment and pension responsibilities start on your staging date. This means that even if you miss it, you will still have to pay backdated pension deductions to eligible employees, potentially another unnecessary financial burden.
One of the other areas that resulted in penalty notices being issued, was due to the incorrect or late submission of the declaration of compliance. It is recommended that employers begin their declaration of compliance as soon as possible to avoid having to rush through it, and remembering to track their progress.
TPR found that a large number of businesses were under the impression that they had correctly submitted their declaration which was not the case. The declaration needs to be completed within 5 months of your staging date and submitted correctly. This is your chance to tell the government that you are compliant and that you are fulfilling your auto enrolment duties, so don't forget about it!
Finally, taking a proactive approach to your auto enrolment compliance is extremely worthwhile and beneficial to you as a responsible business owner and your company as a whole. TPR actively encourage proactive compliance activities for the following reasons:
- Establish and maintain a ‘pro-compliance culture’ amongst employers
- Maximise deterrence for those who are considering committing a breach
- Prevent non-compliance
- Swiftly detect non-compliance
- Investigate breaches in a fair, objective and professional manner, and effectively enforce against non-compliance
A reactive approach could result in fines, back payments of pension contributions and even legal proceedings through a lack of readiness and resource. Staying compliant will help your employees begin saving for their futures and retirements; something that the government identified as being a growing problem in recent times due to life expectancy increasing and people working longer.
Our IRIS payroll software can help you reduce the burden of auto enrolment duties. The IRIS AE Suite™ will run in your IRIS payroll software and automatically assesses your employees, publishes pension communications and sends out electronic payslips and P60s.
This cuts the predicted 103 days it takes to set up and prepare for auto enrolment manually (research by the CEBR) down to around 46.5 days and reduce the predicted recurring burden (per payroll run) from 3.5 days to 0. This helps you stay proactive, maintain compliance and help your employees prepare for their futures.
You can find out more about the IRIS AE Suite™ or even book a free 1-2-1 demo with one of our product specialists to see how the IRIS AE Suite™ can help you stay compliant in a proactive, timely manner.