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Dunelm auto enrolment fiasco: A cautionary tale

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7th May 2014
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The Pensions Regulator (TPR) has revealed homeware specialist Dunelm Soft Furnishings underpaid its initial auto enrolment contributions by £143,000 as a result of a defective payroll system.

As a cautionary tale for businesses preparing to stage, a TPR ‘Section 89’ report reveals how the regulator took action against Dunelm from last August over concerns about its auto enrolment provision.

The company of 8,500 members of staff had failed to register the scheme on time and when the regulator followed this up with a statutory inspection, it revealed a number of serious issues.

The assessment found enrolment in some cases was delayed by between one and three months, which resulted in an underpayment of £35,000 for its four-weekly payroll and £103,000 for its monthly-paid employees.

Dunelm paid the missing contributions for its four-weekly payroll; however an ‘unpaid contribution notice’ was issued for £83,000 for the monthly payroll. The firm had subsequently recalculated its contributions and informed the regulator that it owed an additional £20,000 in contributions.

In the report TPR said Dunelm openly explained the contributory factors in the auto enrolment failures, including “design flaws” in the company’s bespoke payroll solution.

“The bespoke payroll solution did not fulfil the Dunelm specification, was ineffective for automatic enrolment and the reporting capability was not fully functional,” the report reads.

In addition data quality issues delayed the enrolment of some workers and key members of project staff had also left the company at critical stages of delivery.

Registration with TPR, and completing a declaration of compliance, is a legal duty. It demands proper corporate governance to ensure accurate and timely completion, in particular:

  • Smooth handover and consistency should be maintained in the event of key personnel changes to ensure an employer achieves compliance with their duties on time
  • Payroll systems should be tested well in advance of the staging date to ensure they are able to fulfil the requirements of automatic enrolment

Charles Counsell, executive director for auto enrolment at TPR, has urged employers to learn from Dunelm's mistake.

“TPR focuses on a pro-compliance culture and employers and workers understand the ‘we're all in' message - 99.9% of employers who have completed registration have done so without the need for us to use our powers.

“This report shows however, that we will use the powers we have been given to take enforcement action where it is appropriate to do so.”

Following work with the firm and its provider, Dunelm is now fully compliant with its auto enrolment duties and up-to-date with its contributions.

Replies (2)

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By Moonbeam
13th May 2014 13:47

Blaming the software

I blame my payroll software for lots of hopelessness as far as auto enrolment is concerned. I don't assume it will do any new process right first time and I check to make sure what it churns out is what I expect. My clients certainly wouldn't accept the many design flaws my own payroll has to have any impact on good quality data - that's my nightmare to solve.

It wouldn't have been too difficult for an intelligent person in the finance department to roughly calculate what pension deductions should have been made. Clearly the directors weren't bothered about paying for good quality finance staff.

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By Henry Tapper
15th May 2014 09:07

The unknown unknowns

One of the problems for the Regulator is with management information. The massive spike of stagings that we're in the middle of will trigger many breaches and a few deliberate evasions.

Sadly the management information that tPR has to work with is very basic and sorting out incompetence from deliberate malpractice will be hard.

 

It would be nice to think that the Real Time Information that HMRC are not getting , might be shared in a collaborative manner to help.

 

This may be a little over optimistic on my part - but has anyone thought through how RTI submissions could help?

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