The summer is traditionally considered to be a quiet time, but this year, the Pensions Regulator's (TPR) auto enrolment enforcement team is certainly not going on holiday.
TPR has announced that it is targeting those it suspects of failing to comply with their auto enrolment duties with short-notice inspections. It started inspections in May, and will be continuing them throughout the summer.
TPR intends to use data to pursue specific targets so compliant employers should avoid TPR's spotlight. Nevertheless, TPR's data analysis is unlikely to be foolproof, so here are five tips to ensure you are ready for a knock on the door.
Double-check that you are fully compliant
Auto enrolment is complicated and the various earnings levels keep changing, so it is not uncommon to miss something even when you have tried your utmost to comply. It is therefore a good idea to double-check that you have fully complied. Common errors include:
- Not increasing contributions with effect from April 2019: With effect from 6 April, the minimum contributions went up to 8% of qualifying earnings, and at least 3% of that must be paid by the employer.
- Not taking into account the changes to the upper and lower earnings limits for the purposes of calculating a worker's qualifying earnings.
- Not writing to new workers within 6 weeks of their start date to tell them about the pension arrangements.
- Misapplication of the ability to postpone auto-enrolment.
- Failing to re-enrol workers who are not members of an appropriate pension scheme – or who are, but where less than the auto enrolment minimum contribution rates are being paid – once every three years.
Keep full and accurate records
Being compliant in practice is only the first step. You will need to be able to demonstrate your compliance to TPR. This will require you to keep detailed and accurate records including, but not limited to:
- employees' salary details and pension contributions paid by them and you
- the communications you have sent them about pensions
- your assessment of who is an eligible jobholder
- any opt-outs
- your re-enrolment process
- the pension scheme you have enrolled them in.
Remember what you do not have to provide
Although it may feel like TPR's inspection and information gathering powers are limitless, there are in fact limits to them. In particular, TPR generally cannot demand privileged information. So if TPR asks to see any legal advice you may have received check to see if you can withhold it. This exception only applies to legal advice, however, so any advice from other professionals such as employee benefit consultants would still have to be handed over. Also remember that TPR only has power to investigate pension compliance, not your other business affairs, so there is no need to disclose anything irrelevant to pension provision.
Be co-operative (subject to Tip 3)
The easiest way to bring any inspection to a speedy conclusion is to co-operate with TPR. It is also a criminal offence to knowingly or reckless mislead TPR, so make sure to answer their questions as accurately as you can, and do not try to hide things from TPR.
Make notes
Take notes of what TPR has seen and what you have told them. This will help if there are any follow up questions, and demonstrate what information has been given to TPR if that becomes necessary in the future.
