Pension enforcement activity rises protecting savers

New figures published 18th February 2021 demonstrate how The Pensions Regulator (TPR) is continuing to robustly protect savers.

The latest compliance and enforcement bulletin which details enforcement activity carried out between October and December 2020, shows TPR’s use of statutory powers has increased by nearly 50% overall from the previous quarter in line with expectations.

While compliance with the law remains high, automatic enrolment enforcement is returning to normal levels following measures put in place in March 2020 to support employers struggling with the immediate impact of the pandemic.

Director of Automatic Enrolment, Mel Charles said: “We have continued to monitor employer behaviour and compliance closely, throughout the pandemic. The use of our powers declined significantly in the early months of the pandemic, as we introduced measures to support employers to ensure that they were not unduly penalised during a period of unprecedented administrative and financial disruption. We did not want to make a bad situation worse. 

“As we anticipated and following the introduction of government support for employers, we have now lifted those easements and are returning to normal levels of enforcement activity.

“Despite the challenges, the vast majority of employers are meeting their duties towards their staff. However, as these figures show, we will use our powers where appropriate to ensure employers comply with the law.

“We know these are very challenging times for employers, including those who continue to receive government support, and the full impact of the pandemic on businesses will not be known for some time.

“However, businesses that employ staff must continue to ensure they do the right thing for savers, including putting them into a workplace pension and making contributions on their behalf.”

Other bulletin highlights include:

• The total number of times TPR used its powers for automatic enrolment breaches was 24,799 between October and December compared with 16,599 in the previous quarter.
• The number of Escalating Penalty Notices issued in the quarter was 2,957 compared with 7 the previous quarter and the number of Fixed Penalty Notices was 8,362 compared with 83 the previous quarter
• 53 Information Notices in relation to automatic enrolment were issued under TPR’s section 72 powers between October and December, including where used as an alternative to carrying out employer inspections during the pandemic. 
• The total number of statutory powers used in respect of Frontline Regulation was 137 this quarter compared with 131 between July and September 2020.

The bulletin follows the publication of a case study outlining how TPR’s supervisory approach is protecting savers. The report outlines how deficit repair contributions into the First UK Bus Defined Benefit pension scheme were nearly doubled from £18 million per year to £33 million per year following intervention through TPR’s Relationship Supervision.

Engagement with First UK Bus, one of the UK’s largest bus operators, began at the end of 2019 when TPR looked at a number of areas including the schemes’ governance and administration processes. In addition to improved scheme funding, communications and engagement with members was improved and scheme trustees have undertaken a number of training exercises including one which relates to Environmental, Social and Governance, a key priority for TPR.

Executive Director of Frontline Regulation, Nicola Parish said: “Our work with First UK Bus is a fantastic example of how our Relationship Supervision work can significantly improve scheme funding and governance standards. 

“Relationship Supervision allows us to develop relationships with schemes, monitor them more closely, outline our expectations and prevent problems from developing in the first place so that savers are safeguarded.”

The Pension Regulator (TPR)

TPR is the regulator of work-based pension schemes in the UK. Their statutory objectives are: to protect members’ benefits; to reduce the risk of calls on the Pension Protection Fund; to promote, and to improve understanding of, the good administration of work-based pension schemes; to maximise employer compliance with automatic enrolment duties; and to minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of the regulator’s functions under Part 3 of the Pensions Act 2004 only).

PAYadvice.UK 18/2/2021