TPR issues first employer compliance notice for AE failings

The first auto-enrolment compliance notice will certainly not be the last. But this landmark was not one the Pensions Regulator wanted to make noise about. John Greenwood reports

The Pensions Regulator’s first compliance notice, issued to an un-named employer who has failed to meet its auto-enrolment obligations, as confirmed by Corporate Adviser last month, marked a minor new milestone in the regulator’s role as enforcer. The regulator had also issued 38 warning letters to employers for minor breaches of the regulations, a Corporate Adviser Freedom of Information Act enquiry revealed.

A report published in July confirmed that by March 31, 2013 TPR had opened 89 investigations into possible non-compliance by large employers, focused on communicating with jobholders, but had not used its powers to compel compliance.

Since then one employer has been issued with a compliance notice, which are issued where a responsible individual has contravened one or more of the employer duty provisions under s.35 of the 2008 Act.

Compliance notices require the individual to take or refrain from taking steps to remedy the breach. 
Warning letters notify employers of potential breaches and give them the opportunity to put them right within a reasonable period or to prevent it from re-occurring. 

TPR says no other notices, penalties or other formal compliance measures have been deployed so far. But the regulator has refused to disclose the extent to which any employer has failed to comply with its auto-enrolment obligations by its staging date, arguing that disclosing such information would prejudice ‘the effective conduct of public affairs’.
TPR says it wants to encourage and establish a pro-compliance culture among employers. It argues that disclosing the nature and extent to which employers have failed to comply could influence behaviour in a negative way.

TPR’s response to the FOI request says: “The Regulator believes that the information requested is not in the public interest to disclose at this time as it could lead to inaccurate or misleading estimations of levels of compliance and set a precedent for future compliance for those employers who are yet to undergo automatic enrolment. Information held in respect of automatic enrolment continues to change and consequently employer compliance will also continue to change as we progress with the small and medium employers…
“The Regulator aims to achieve its statutory objective by educating employers about their responsibilities, encouraging and assisting them to comply with the legislative requirements under the Pensions Act 2008. The Regulator believes that where the release of information could lead to individuals attempting to calculate employer compliance and the associated risks of not complying with the requirements it would not be in the public interest to release such information.”

A spokesperson for The Pensions Regulator says: “The regulator’s recent automatic enrolment analysis and commentary report states that many of the early investigations into possible non-compliance relate to employer readiness and gives the example of worker communications. 

“One of our core messages to employers is to allow plenty of time to prepare for their staging date. Where we identify particular issues affecting a certain sector or size of employer, we will look to highlight this with those employer using the most appropriate channel. Most of the investigations opened so far have been to help employers to comply on time where we had concerns they were not on target. We’re pleased to say that in the vast majority of incidences this has been achieved through direct communication without the need to use our powers to compel compliance.

“We plan to publish further detailed information around compliance and enforcement work. We will promote good compliance behaviour among employers by ensuring that the legislation is being applied fairly and that those who do not comply will face enforcement action in line with our risk based approach.”
Lansons director of regulatory consulting Richard Hobbs says: “A public interest argument is extremely hard to mount. Their argument is equivalent to say that reporting murders would lead to more murder, whereas detection and conviction rates might be lower if these issues are reported.

“I would argue it would be in the public interest to instead say we are on the case and where we find problems we go after them.”
The revelation has provoked reflection amongst industry professionals that if a large employer can default on their auto-enrolment obligations so soon, then far more breaches are likely when thousands of smaller companies reach their staging dates.

One industry insider has suggested that the reason TPR has not made more of this first breach of regulations is that the particular case was ‘not the right sort of example’. Whether it will move to a more public approach to disciplining employers remains to be seen.