Auto enrolment non-compliance case highlights complexity of system

RA Now

The Pensions Regulator has published its first automatic enrolment section 89 report for a company that has not complied with the regulations, and warned that employers struggling to meet their automatic enrolment duties should let the regulator know sooner rather than later.

The company – Dunelm Soft Furnishing – was found to have failed to enrol members of the four weekly and monthly payrolls on time and not paid across to the pension provider a significant level of contributions as a result.

“The Pensions Regulator focuses on a pro-compliance culture and employers and workers understand the ‘we’re all in’ message – 99.9% of employers who have completed registration have done so without the need for us to use our powers,” said Charles Counsell, executive director for automatic enrolment.

“This section 89 report shows however, that we will use the powers we have been given to take enforcement action where it is appropriate to do so. I am pleased to see that the employer in this case is now compliant with their duties. I would urge all employers to take heed from the lessons learned here so that they avoid the same pitfalls.”

Payroll systems should be tested well in advance of the staging date to ensure they are able to fulfil the requirements of automatic enrolment, and a smooth handover and consistency should be maintained in the event of key staff changes, the regulator said.

David White, managing director of Creative Auto Enrolment, said the case shows just how complex auto enrolment is and that even larger companies are struggling to meet their requirements.

“Payroll providers need to make sure that their clients are geared up to prepare for auto enrolment and that their data is good enough to cope with all the complex payment required for auto enrolment. Dunelm’s data quality problems caused major issues and if more businesses follow suit, they could be faced with hugely damaging cash flow issues,” he added.

White added that the government is not doing enough to help businesses comply.  

“This is proof that they’re simply not doing enough to ensure employers are fully prepared. Payroll providers have a key role to play in helping clients with auto enrolment – if your clients aren’t coping, point them in the direction of a full solution that can avoid them falling into these traps.”