NEW: Employers confronted over missing #pension contributions https://t.co/N77bt8hQFT

— Josephine Cumbo (@JosephineCumbo) January 20, 2023

I wish the FT would make this article free to view, it has become a preoccupation of its author and other than Ros Altmann, whose article on the same subject is featured alongside, this journalism is the best hope that a nascent but growing problem comes to the public eye.

Much as I get frustrated by The Pension Regulator’s failures to get to grips in other areas of funded pensions, its work on auto-enrolment has so far, been exemplary.

The scale of the task is immense. There are more than 1.4 million employers currently contributing a portion of their payroll to occupational and contract-based . Policing the compliant payment of contributions is a gargantuan operation dependent on the co-operation of employers, their payroll departments (and for smaller employers the bureaux they outsource too and the software suppliers to the payroll industry).

The DWP are helped by the sharing of real-time-information from HMRC , a positive development which resulted in a number of high-profile prosecutions during auto-enrolment staging. Employer compliance has been high because of the exemplary standards set by the payroll industry. I would point again to the Chartered Institute of Payroll Professionals (CIPP) that maintain standards to a high level.

But it is nonetheless worrying to hear that

Official figures disclosed by TPO to the Financial Times revealed complaints about unpaid workplace pension contributions rose to 686 in the 2021-22 financial year, compared with 539 the year before, an increase of nearly 30 per cent.

This however pales into insignificance compared to non-compliance picked up by the Pensions Regulator.

In the six months to June 2022 the regulator issued 13,604 notices to employers for unpaid contributions, compared with 13,376 in the previous six months. In the first half of 2022, just over 5,900 escalating penalties were issued to employers not responding to earlier enforcement action.

This is meaningful non-compliance and these escalating penalties are meaningful.

The regulator can chase the worst offenders through the courts, and name and shame them on its website, albeit this information is not easy to locate. Recent unpaid fines include £24,000 for a recycling company and £15,400 for a London pub. Where serious fraud is suspected, those involved can face criminal proceedings.

If you want to see the hall of shame , then click here.

Thoughts

Auto-enrolment is working and working because it is founded on sound infrastructure. The payroll and accounting software industry got things right during staging and found work a rounds to accommodate insurers and master trusts who failed to create a common standard (the PAPDIS initiative never got off the ground).

But it is easy for standards of behaviour to slip, even if practice does move things towards perfect.

We need Jo Cumbo and Ros Altmann and anyone else for that matter, to keep employer’s noses to the bone. As the FT article suggests, the economic pressure on small businesses are unrelenting and the cost of auto-enrolled pensions is one that is easy to dispense with, we just need to keep reminding each other that collecting employee contributions and not paying them on is theft.