Standard Life is calling on the Pensions Regulator to respond to concerns of growing employer non-compliance by publicly stating whether it believes auto-enrolment is still on track.
The provider has made the call after confirming it had identified a third of the employers it had expected to peak in the key April and May staging period had failed to materialise.
Last month Nest chief executive Tim Jones said the provider ‘had not seen the significant step-up that had been predicted’, a view shared by several other big providers, sparking fears of widespread employer disobedience.
Providers and advisers have expressed surprise at the lack of any fines at all to date, even though some employers have auto-enroled parts of their workforce several months after their staging date. Providers suggest it is inconceivable that thousands of employers are not now in breach of their legal duties.
Some advisers have reported employers refusing to progress their auto-enrolment duties because they expect a re-run of the disastrous roll-out of stakeholder pensions in 2001, when around 70,000 employers failed to comply but only one received disciplinary action as a result.
The Pensions Regulator points to research it has carried out that shows a majority of employers were on track to meet their obligations.
Standard Life head of corporate strategy & propositions Jamie Jenkins says: “We have an elephant in the room which is that as many as a third of April and May stagers cannot be accounted for. This may be either because they are being tardy in getting their schemes sorted or because they have paid less attention to their staging date than to their auto-enrolment date.
“If they still do auto-enrolment on time then we can live with that. Or the alternative is that we have a systemic issue that there is not the support in place and auto-enrolment is starting to falter.
“The regulator is torn between being seen to have teeth but not wanting to punish small employers. But they will have to do something at some point.
“We either need to get a statement from TPR that they are happy with the way things are going, or they should come out and fine some employers.”
A spokesperson for The Pensions Regulator says: “More than 15,000 of the country’s largest employers have successfully implemented automatic enrolment. The Pensions Regulator meets regularly with providers and employer bodies and carries out research with employers in the months before they are due to stage to establish both how aware they are of their duties and what they have done to meet them.
“Our research to date has indicated the majority of employers staging this Spring were on track and had both selected a scheme and were aware of their duties well ahead of their staging date.
“We have an extensive team of compliance investigators and those employers who may chose to ignore their duties should be aware of the potential penalties. We intend to begin to publish regular information on our enforcement activity from next month.
“If employers don’t comply, they’ll face enforcement action in line with our risk-based approach. Enforcement action starts with statutory notices and is followed by penalty notices, which may result in court action. This means that compliance notices – which clearly indicates what an employer must do and by when – are often issued before an employer receives a fixed penalty notice.”