The success of automatic enrolment has been hard won – we cannot let COVID-19 set us back
While COVID-19 continues to have a huge impact on the way we live, socialise, shop, work and of course the way we run our businesses - it remains vital that we do not lose sight of the longer term.
It is important to remind ourselves what was achieved in workplace pension saving before the pandemic and why it is no less important now.
Since it started in 2012, automatic enrollment has changed workplace saving. More than 10.3 million people who were not saving for later life are now in a pension with the opportunity to save for the retirement they want.
Automatic enrolment changed hearts and minds about pension saving. Staff now expect a pension as part and parcel of their job and the majority of businesses want to, and are doing, the right thing for their staff.
The success of the roll out was hard won with commitment from government, the industry and most of all, 1.7 million employers who have successfully complied with the law. It is now vital that we guard that success so millions of people can continue to save now and in the future.
COVID-19: A risk-based approach
At the start of the pandemic in March, as the risks and impact to employers became clearer day by day, TPR acted quickly to support them. In line with government and our risk-based proportionate approach, we took action to help them. This included clear guidance about what we expected of employers as well as altering our enforcement approach so that, if they were struggling, we did not make a challenging situation worse.
One, very practical concern for smaller employers for example was that they, like everyone, were told that they should work at home if they could at the peak of lockdown, while businesses in a number of sectors were shut and could only reopen when it was deemed safe to do so. This meant they may not have been able to pick up penalty notices received in the post. We recognised that posting them a penalty notice at the height of the lockdown would be impractical and simply add to the strain.
The temporary change in our enforcement approach is borne out in our Compliance and Enforcement bulletin published in August. A drop in the number of times we used our powers demonstrates how we responded to ease the burden on employers caused by the pandemic in a practical and proportionate way.
We decided to delay enforcement action for employers concerned they would not be able to make the correct contributions. We gave employers more time to agree a plan of action with their provider to bring payments up to date. And, while non-compliant employers continued to receive warning notices, we made decisions whether to escalate any enforcement in light of the pressure we knew they were under.
Despite the challenges faced by businesses, pension contributions made by employers have remained steady throughout the pandemic to date. We have not seen a significant or unusual spike in missed contributions.
However, as the recently published data shows, while we have been taking a pragmatic approach to enforcement, we have remained firmly focused on rooting out and taking action against employers who have been willfully non-compliant and committed serious breaches.
Breaches have included failing to enrol staff and collecting contributions without paying them across to the scheme. As well as responding to alerts from pensions schemes, in many cases, enforcement action was triggered by whistleblowers. Often, a warning of steep financial penalties has been enough to ensure compliance.
In one example, TPR followed up report that a major global restaurant operator had not paid across £45,000 in missing staff contributions for its UK business. The payment has now been made and contributions now remain ongoing. In another example, TPR followed up a whistleblower report that contributions were not being made by a scaffolding firm amounting to £90k for 100 savers, and as a result of us making contact, the firm has now committed to making up the shortfall with their pension provider.
We remain focused on savers
We are clear that TPR’s focus remains firmly on the protecting savers. We will continue to monitor employer compliance closely to ensure failing employers get back on track and their staff receive the pensions they are entitled to. We will take a dim view of employers who seek to exploit the impact of COVID-19 to deliberately avoid their pension duties.
Our recently launched advertising campaign reminds employers that while their business might have changed due to COVID-19, their responsibilities towards their staff haven’t. Employers must continue to assess and put eligible staff into a pension, they must continue to make the correct contributions on time and they must complete re-enrolment duties and their declaration of compliance.
More time is needed to judge the ultimate impact of the pandemic on saving, and we know employers will continue to face challenges, but early indications are that the vast majority of employers, despite the difficulties, have continued to successfully meet their workplace pensions duties towards their staff. We have seen no evidence of a significant spike in non-compliance.
The numbers of employers completing their declaration of compliance, completing re-enrolment and visiting our website to find out what to do to meet their responsibilities has remained steady.
The situation is constantly evolving, and we are continuing to respond to the changes. We are keeping our approach and guidance under review.
But our message is clear. We will take the right action at the right time to support employers and ensure savers are protected.
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