The Pensions Regulator (TPR) has significantly increased the use of its formal powers to ensure small and micro employers comply with their auto-enrolment (AE) obligations.
The watchdog's interventions between April 2015 and March 2016 had increased by 306% since the previous year, using its formal powers 8,812 times in the period, according to its annual commentary and analysis. Of these incidents, 6,241 were compliance notices, and 2,002 were fixed penalty notices. It is a huge surge from the period for between April 2014 and March 2015 when it only used its formal powers on 2,169 occasions.
A spokesperson said TPR's increase in use of its powers was expected.
They said:"The first quarter of 2016 saw a significant rise in the numbers of employers reaching their deadline to comply. 31,314 completed their declaration in the period, compared to 2,282 in the same quarter last year.
"With the increase in the numbers of employers and the changing employer type we have as expected seen an increase in the number of times we have used our powers. Small employers often behave like individuals and not like businesses. Like individuals, there are those who are organised and will get on with things but there are some who will leave things to the last minute.
"The start of automatic enrolment for small and micro employers has been a success with around 95% of the first group to reach their staging date now compliant. The vast majority of employers comply with their duties on or ahead of time."
The report also shows AE has helped get 20% more employees into pension schemes, although small and micro employers are needing a bigger nudge to comply than their larger counterparts.
Two-thirds of employees are now in a pension scheme, with nearly one million being auto-enrolled between April 2015 and March 2016.
Around six million people have now been auto-enrolled since 2012, when just 47% of employees were members of a scheme. Some 110,103 employers have now completed the AE staging process, of which 64,283 declared compliance between April 2015 and March 2016.
Most employers (92%) chose to auto-enrol employees into a defined contribution (DC) scheme, while 98% of those who chose to use a DC trust scheme opted for a master trust.
Executive director for AE Charles Counsell said TPR is now focusing on engaging small employers yet to stage, of which 57% are micro-employers and 34% employ just one person.
He said: "Our key challenge in the past year has been to engage hundreds of thousands of small and micro employers and to help them prepare for automatic enrolment.
"We needed to target these employers in new and innovative ways. The hard work and commitment of the many organisations that support employers - from trade bodies to employer representative bodies - has made a huge difference."
TPR has revised down estimates of the number of employers needing to comply with AE duties from 1.8 million to between 1.32 million and 1.46 million. It said real-time information from HM Revenue and Customs, as well as employer feedback, helped it identify single person directors, which do not need to comply.
However, it still forecasts around 950,000 employers will be required to put their employees into a scheme. Between 431,000 and 459,000 are expected to stage between April 2016 and March 2017.
The People's Pension director of policy and market engagement Darren Philp welcomed the figures but said small employers still need help.
He said: "AE is a vital part of getting people to save for later life, so it's reassuring to note employer compliance remains high.
"Even with the revised numbers we've seen from TPR today, the challenge for those small employers still to stage remains demanding. AE isn't as easy for small employers as it should be and we know they need help and support to get it right."
The report also stated just 88% and 79% of small and micro employers due to stage within the next two years have an understanding of AE one to two months before their staging date. TPR said the level of understanding was similar to that of large and medium employers at a similar point.
Small employers must prepare for their AE obligations, even if they have no eligible employees. Those with between five and 49 employees that are not ready by their staging date could be fined as much as £500 per day.
However, earlier this month figures from NOW Pensions showed 20% of small employers registering with the provider were missing their staging date. This is despite TPR writing to employers a year before their staging date to offer guidance.
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