10th March 2015

Carrot, Sticks and why employers need to take auto enrolment seriously

The next couple of years will see a huge number of employers approach and then pass the date in which they need to start to comply with auto enrolment regulation.

Now whilst the fines for companies not complying with this regulation have been clear for some time until recently the pensions regulator has taken the approach of encouraging and educating employers (effectively using more “carrot than stick”).

However recent news seems to suggest that the regulator is changing their approach and has started to use their enforcement powers more, erm, forcefully.

Between July and September 2014 the regulator only issued 3 fines for employers who didn’t comply with regulation.

However between October and December 2014 this has rocketed up to 166 issued fines.

It’s important to say that I agree with the approach the regulator has taken up to this point.

Encouragement and education should always take priority over fines and penalties, especially for the small businesses who now need to comply with auto enrolment.

Saying that the pensions regulator is now seeming to realise that to avoid mass non compliance it needs to show it’s got the power to enforce and ain’t afraid to use them.

It needs to show it’s not a toothless tiger, but a tiger with teeth.

As well as showing that it can educate and enable with the carrot the regulator is now in a position where it is using their enforcement stick!

Whilst the number of firms who have been fined is still relatively small the vast change in fines has illustrated one thing…

The regulator is getting serious about non compliance.

This should send a clear message to employers…

Auto Enrolment shouldn’t be ignored and employers should focus on ensuring they’re ready for the new regulation before it’s too late.

However I sympathise with SME businesses. With a lot on their plate already it’s increasingly tougher to find the time to comply with the rules they now need to follow.

I also understand that learning about the new rules and what employers need to do to comply, especially when they’re busy with the wide range of other regulations all businesses need to comply with.

However maybe AE in a Box can help…

Whilst employers can comply with the duties themselves by learning the tasks they need to complete in a systemised step by step process, the fact is that many employers are looking for support. This can be achieved by working with professionals or using a support solution like AE in a Box.

However one thing is clear…

The pensions regulator is taking non compliance seriously and employers need to start to waking up to the fact that they now need to comply.

Read more about AE In a Box on our Auto-enrolment Microsite.

Business Development, Auto-Enrolment