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Reports to pension regulator increase

The Pensions Regulator (TPR) investigated 455 reports by employees concerned about their pension in 2023/2024

Reports to The Pensions Regulator (TPR) by employees concerned about auto-enrolment (AE) in their workplace pension scheme have risen, The Sun reported on 19 May.

The data came to light as part of a Freedom of Information request made to TPR by The Sun.

Employees can report their employer or workplace pension scheme to TPR if they have concerns about enrolment or mismanagement of the scheme.

Joe Dabrowski, deputy director of policy at the Pensions and Lifetime Savings Association (PLSA), told HR magazine that employers must provide a pension scheme for their workers.

He said: “Most UK employers are legally obligated to automatically enrol eligible employees into a workplace pension scheme and make contributions to their pension pots. 

“Eligible employees are those aged between 22 and the state pension age [66], earning over £10,000 a year.

“Employers must provide a qualifying workplace pension scheme that meets specific criteria set by TPR.”

Lily Megson, policy director at My Pension Expert, added that employers are required to let employees opt out and rejoin the pension schemes if they wish to.

She told HR magazine: “Once enrolled, your employer must pay at least the minimum contribution (3%) into the pension scheme; allow you to opt out of the scheme if you ask; refund the money you’ve paid in if you opt out within one month of joining; let you re-join at least once a year if you’ve opted out; and enrol you back in every three years if you’ve opted out and are eligible for auto-enrolment.”

Read more: Millions of low earners could be safely auto-enrolled in pensions

Kate Smith, head of pensions at Aegon, warned that employers that fail to meet their obligations can face a penalty.

Speaking to HR magazine, she said: “If employers fail to auto-enrol eligible employees correctly, pay incorrect contributions or fail to send these to the pension provider on time, they risk being fined.

“If outstanding contributions aren’t paid within a reasonable time, the pension provider, after liaising with the employer to ‘put things right’ must report the employer to TPR.

“This may result in penalties ranging from £50 to £10,000 depending on the scheme size. Wilful non-compliance could lead to prosecution.”

A spokesperson from TPR told HR magazine that it could penalise employers who don't comply in a number of ways.

They said: "The great majority of employers are meeting their legal AE duties, but for those who don’t, we will take action.

"We have various enforcement powers available to us, ranging from warning letters, compliance notices, financial penalties, and even criminal prosecution. Compliance notices are generally the first step in our graduated compliance regime.

“We will also work to ensure workers are put back into the position they would have been in, had the employer or third party complied with their regulatory obligations.

“We recognise that the best way to achieve compliance is to provide guidance to employers about the duties and safeguards, so they understand how to comply with the law. General guidance can be found on our website."

Read more: National insurance cuts raise state pension question

Megson added that employers should regularly review their pensions policy to ensure they remain compliant.

She told HR magazine: “HR can ensure compliance with legal requirements for pension contributions by regularly reviewing employee records to confirm that all eligible employees are enrolled in the pension scheme.

“They should also ensure that all the company’s legal obligations are clearly communicated to the staff. Further, HR must ensure that they have declared their compliance to TPR, making use of the regulator’s checklist as a guide.”

Dabrowski added that employers should ensure their employees are aware of and understand the scheme to avoid claims of mismanagement.

He continued: “Clear, consistent communication is the worst kept secret when it comes to pension schemes. Ditch the jargon and opt for straightforward updates and engaging educational sessions. 

“HR can use various tools, like Retirement Living Standards and the Pay Your Pension Some Attention campaign to make pensions relatable and understandable. 

“HR can also support employees by making sure they regularly update their data with their pension provider. Keeping the conversation going helps prevent any claims of mismanagement and keeps employees in the loop and confident about their future.”