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Auto enrolment: Large employers are all in

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30th Jul 2014
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The Pensions Regulator (TPR) has reported that all of the country’s largest businesses have now passed their staging dates for automatic enrolment (AE).

TPR’s commentary and analysis report 2013-14 shows that 99% of the UK’s largest employers met their legal duties without the need for the regulator to use its statutory powers.

In total 10,817 employers completed their declaration of compliance between April 2013 and March 2014, confirming that they had complied with their duties, while 785 potential non-compliance cases have been referred for investigation.

Of the businesses that have staged 24% have used a defined benefit (DB) or hybrid scheme, and 72% have gone with a defined contribution (DC) scheme.

Thousands of medium employers are currently reaching their staging dates and the regulator has started sending out letters to the first of the small employers, those with less than 50 workers, who are due to automatically enrol their eligible workers next summer.

Charles Counsell, executive director for AE at TPR, said: “Our aim has been to encourage a proactive compliance culture amongst employers. The past year saw near universal compliance, with many employers actively embracing the changes with innovative communications to ensure their workers understood the benefits of a workplace pension.

“There is plenty of good news, with employers keen to ensure they do things properly and low opt-out rates. But we know there are challenges ahead. We will now continue our work over the months ahead to ensure medium and small employers understand their obligations, comply with their legal duties and continue to view non-compliance by other employers as unacceptable.”

The TPR report also shows the growing use of defined contribution ‘master trusts’, open to multiple employers, and provides examples of how the regulator has intervened to prevent breaches and ensure that workers receive the pension contributions they are entitled to.

In May the regulator revealed homeware specialist Dunelm Soft Furnishings had underpaid its initial AE 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 revealed how TPR took action against Dunelm over concerns about its AE provision.

Another key finding from the report was 4,590 of employers used postponement - the option available to employers to delay the assessment of their workers by up to three months from their staging date.

Last month NEST and other providers said the expected flow of April stagers had failed to materialise, raising concerns of widespread flouting of the law by employers.

Some employers may be postponing their AE initiatives by three months, but it is not clear to what extent they have fulfilled their obligation to tell employees about this or whether they have a qualifying scheme set up and ready should employees want to opt in.

NEST chief executive Tim Jones said: “We are not seeing the significant step-up that we would have expected had all those due to stage in April gone through. We are doing hundreds of employers a week, but not thousands. Some people look to have gone through their staging date without having put a scheme in place.”

Employers can find their staging date using the TPR calculator and its timeline planner tool will show them what they need to do and when.

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