When naming and shaming had to stop

name and shame

It now is clear there are not one but two firms that have been hit with a  £350,000 fine through escalating penalties from the Pensions Regulator and both relate to the non-payment of monies into staff pension accounts. These are breaches of auto-enrolment regulations, basically fines relating to payroll practice and the illegal retention of deferred wages. In one instance we know the fine resulted from an attempted theft from staff of £100,000.

In the past, employers like Dunelm and Swindon Town FC, who flouted the rules were named and shamed, but that has now stopped.

The question of naming and shaming is contentious and was picked up in an FT article from Jo Cumbo

“Maintaining a shroud of secrecy around one firm which has been fined while naming and shaming others doesn’t really make sense,” said Tom Selby, senior analyst with AJ Bell, an investment platform. “Ultimately the firm will have to file accounts with Companies House and so, one way or another, this information will become public.”

This is true and no doubt the executive of the employer (with over 2000 staff), knows that their anonymity is temporary. The regulator said it did not consider it “appropriate or proportionate” to name the business, clearly it feels it is in the interests of staff not to be transparent at this time.


Protecting confidence

This may be one of those rare cases, where transparency needs to be tempered with pragmatism. What amounted to  attempted theft of staff pension contributions seems to have arisen from incompetence rather than criminal intent and the remedy put in place may already have resulted in the incompetents being sacked and a new regime arriving – intent on restoring confidence in pensions.

If this is the case, then some time to restore order is sensible. We have to question how much of all this, the impacted staff know, and whether they have been properly compensated for any losses incurred in the late payment of contributions.

But with those who staff who’ve been impacted, having access to their contribution records, it seems unlikely that they don’t know what’s gone on. That we know nothing from them, suggests that sleeping dogs are best left to lie.

name and shame 2


The worry of AE compliance

TPR also report that between April and June this year tPR issued 23,000 fines and that from the spot checks it has been running, 75% of the companies investigated had AE breaches.

There are around 1.4 million employers in the UK who have auto-enrolled staff but if the quarterly run rate is creeping towards 25,000, then this suggests we may be seeing 1 in 10 companies in line for a fine.

Screenshot 2019-08-23 at 06.43.49.png

Source- tPR compliance and enforcement – April-June 2019

The shift in tPR’s position is clear, we are moving from education to enforcement, the trend in non-compliance is clearly up and we are going to have to keep a keen eye on these quarterly bulletins.

The worry of AE compliance is that the public loses confidence in pensions through non-compliance over the payment of contributions. The employer is key to keeping AE on the road which may explain the less aggressive approach being taken in the two instances at the top of this blog.


When naming and shaming has to stop

With 23,000 employers in breach last quarter and over 300,000 having been issued some kind of compliance notice, the list of those potentially in breach would be a long one.

Naming and shaming the 24,000 employers who have been issued escalating penalty notices is no longer practical. There are some flagrant abusers who are still named and shamed (Dunnes Stores), but for the most part – the penalties paid by employers are now part of business as usual.

It seems that a fair war-chest is being built up in Her Majesty’s Treasury from all these fines. Perhaps they might consider returning money to Napier House, tPR’s Brighton HQ.

Now may be a good time to use that money to good effect. An analysis of the detriment created by the 300,000+ breaches to date should result in a better understanding of when employees are being short-paid and when the breach is of a technical nature with little harm to staff pension contributions.

This analysis should lead to the isolation of breaches which have no material impact and recommendations to amend secondary legislation to cut these breaches out.

We know that AE compliance is complex, we have known from the start. But AE has worked despite of the complexity. That AE is working doesn’t mean that it can’t be improved and the cost of tPR’s compliance and enforcement looks considerable.

TPR are being pragmatic in not naming and shaming employers in serious breach where anonymity is best preserved. Let’s hope that that pragmatism is evident throughout the compliance regime so that we can see the number of breaches falling.

If 75% of spot checks result in the identification of a breach, it may not be employers who are at fault – so much as the rules.

About henry tapper

Founder of the Pension PlayPen, Director of First Actuarial, partner of Stella, father of Olly . I am the Pension Plowman
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