The Pensions Regulator (TPR) has significantly increased the use of its formal powers to ensure small and micro employers comply with their auto-enrolment obligations.
The watchdog’s interventions between April 2015 and March 2016 had increased by more than 300% 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.
The report also shows auto-enrolment 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.
About 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 auto-enrolment 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 automatic enrolment 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 their duties from 1.8 million to between 1.32 million and 1.46 million. It said real-time information from HM Revenue & Customs, as well as employer feedback, helped it identify single person directors, which do not need to comply.
However, it still forecasts 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: “Auto-enrolment 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. Auto-enrolment 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 auto-enrolment 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 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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