The Pensions Regulator has yet to reveal plans for ensuring employers comply with auto-enrolment requirements. Rachel Dalton examines how these might involve providers
Ensuring compliance with auto-enrolment has been a problem area from day one. Critics have claimed that The Pensions Regulator lacks the capacity to ensure employers toe the line, and politicians have said more must be done to protect employees from non-compliance. According to PP sources, the burden may yet fall on providers.
The current set-up
Pensions minister Steve Webb has been fielding enquires on how auto-enrolment compliance will be enforced for some time. Back in 2011, MPs questioned Webb during a committee debate on the Pensions Bill about how enforcement would work.
Webb said TPR would be able to cross reference Paye As You Earn records with auto-enrolment records to see where staff opt out (IFAOnline, 14 July 2011).
“The regulator will not be able to tell between genuine opting out and [coerced] opting out. That is where an individual who feels aggrieved will be able to report it,” he said.
“We do not want to create massive burdens of reporting, but we will be reporting back to the House on the progress of auto-enrolment,” he added.
Webb said TPR will focus on “suspicious” opt-out rates, such as entire workforces opting out at the same time, and rely on whistleblowing employees.
TPR executive director Charles Counsell has also since confirmed the regulator will rely on spot checks of employers’ data to ensure businesses play by the rules (PP Online, 11 January ).
Politicians are not satisfied with the light-touch proposal, however. Some have drawn comparisons with the minimum wage duties placed on employers, which, according to Labour leader Ed Miliband, have only been used to prosecute a handful of employers since 1998 as compliance is difficult to check.
In May, the Work and Pensions Committee published a report voicing those fears.
“Relying on whistleblowing to identify non-compliance has inherent problems, particularly in respect of small firms where the fact that a business has only one or two employees will make it impossible for TPR to guarantee anonymity to the person making a complaint,” the report says.
“TPR needs to consider very carefully how it will address this issue and whether it needs to use more proactive methods to check compliance among small employers.”
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