On 26th September 2022, the Pensions Regulator issued a warning to UK employers about their auto-enrolment duties. This warning follows an investigation into twenty of the UK’s largest employers (covering nearly 1.5 million employees) across the transport, hospitality, finance and retail sectors.
The Regulator’s investigation showed that while employers are typically successful in setting up a workplace pension scheme and auto-enrolling their employees, they are often making technical or administrative errors when calculating and paying contributions. When errors are uncovered, employers have to investigate the impact and pay costly backdated contributions.
There are a number of areas in particular where mistakes are being seen:
- using an incorrect salary basis for determining contributions, including not updating administration systems to reflect statutory changes to the earnings thresholds used to calculate qualifying earnings;
- paying incorrect contributions during periods of maternity and other family leave; and
- failing to re-enrol correctly, or to correct existing errors at the re-enrolment stage.
While the Regulator’s investigation focussed on certain large employers, its compliance and enforcement powers have a much broader reach. In the six months from January to June 2022, the Regulator issued around 20,000 compliance notices, 15,000 fixed (£400) penalty notices and 6,000 escalating penalty notices (at a daily rate ranging between £50 and £10,000).
Given the Regulator’s warning, now would seem like a prudent time for employers to carry out an auto-enrolment “health check” to make sure that they are fully compliant. Get in touch to find out how we can help.
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