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May 13, 2016

Workplace pension whistle-blowing on the rise

Workplace pension whistle-blowing on the riseThe number of whistle-blowing reports made by employees who haven't been offered workplace pensions has gone up by almost a third in the past year.

Data from The Pensions Regulator (TPR) obtained by law firm Clyde & Co shows that there were 2,545 whistle-blowing reports in 2015/16 compared to 1,968 in 2014/15, a rise of 29%.

It raises concerns that many SMEs may face enforcement action as a result of non-compliance with auto-enrolment. And Clyde & Co warns that The Pensions Regulator has significantly stepped up its enforcement action over the past year. The number of enforcement actions used against employers has risen more than four-fold, from 1,947 in 2014/15 to 8,812 in of 2015/16.

Under the new workplace pension law, which came into force in 2012, all businesses must enrol all eligible employees into a pension's scheme or face escalating fines. Many firms have already reached their compliance deadlines; the final staging dates are in February 2018.

Mark Howard, head of pensions at Clyde & Co, said: "It is not surprising that we are seeing the number of whistle-blowing and enforcement actions increase as the number of employers subject to auto-enrolment grows substantially.

"The final stages of the auto-enrolment process are likely to be the most challenging, as there are so many employers that will need to enrol their employees," he added. "On top of this, the SMEs yet to face their enrolment deadlines are not going to have the support of HR departments to help them deal with the administrative headache of enrolling their employees into a pension scheme."

Clyde & Co says that the most commonly used enforcement action is to issue a compliance notice - an order to take steps to comply with the legislation. Howard said: "Compliance notices may seem harmless, but failure to comply can result in a daily fine which could seriously hinder many SMEs' profitability."

He said: "Auto-enrolment is not going to disappear and the paperwork can often take far longer than expected. SMEs should not bury their heads in the sand and hope the problem will go away."

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