Category: Industry News

17 March 2017

Spot checks are to be carried out on employers across the UK to ensure they comply with auto-enrolment duties.

The inspections are part of The Pensions Regulator’s (TPR) ongoing enforcement activity to ensure employers comply with auto-enrolment obligations and are meeting their pension duties correctly.

Employers TPR judges to be at risk of failing to meet their duties are being visited. As well as providing valuable insight into employer behaviour, the spot checks are to investigate any non-compliance. The spot checks are also there to help employers get back on track or take enforcement action where necessary.

The inspections also serve as a warning to employers. They will show that they cannot ignore the workplace pension and that deliberate non-compliance will not be tolerated.

Executive Director of Automatic Enrolment Charles Counsell has commented. Counsell said: “Auto-enrolment has been a great success so far with more than seven million people now saving into a workplace pension. It’s important employers continue to make contributions into their staff’s pensions. These spot checks make sure ongoing compliance is being maintained. It is not fair to staff if they do not get the pensions contributions they are entitled to by law. We take non-compliance seriously and will take enforcement action when we need to.

Mr Counsell added: “As well as investigating any non-compliance, these inspections will also help shine a light on employer behaviour. This will help us see why different types of employers fail and identify good practice that others can learn from.”

Employers are given a short period of notice before the inspection and will be from a range of business sectors including those at risk of failing to meet their duties, for example the hospitality and retail sectors.

The Department for Work and Pensions’ (DWP) are reviewing auto-enrolment feedback.

Auto-enrolment feedback is wanted on the existing and future coverage of employee engagement and contribution levels.

Employers, employee representatives, pension industry professionals, accountants, payroll staff, independent financial advisers, employee benefits consultants and the general public have until 22 March 2017 to respond.

The DWP, an external advisory group, will lead the 2017 review of automatic enrolment. They will seek to ensure that auto-enrolment continues to meet the needs of individual savers. But also that the technical operation of the policy is working as it was intended.

The government has released a set of initial questions relating to the review. The questions call for feedback across three core areas: coverage, engagement and contributions.

10 February 2017

Employers who ignore their auto-enrolment duties could end up with auto-enrolment fines as well as a bad credit rating after being handed a County Court Judgement (CCJ).

A small number of companies have been handed CCJs after failing to pay their automatic enrolment fines.

This can happen when employers persistently ignore penalty notices sent to them by The Pensions Regulator. Employers failing to pay within 30 days of receiving the CCJ, will have the details entered on their credit record. This means they will find it difficult to borrow money to invest in their business.

The report has the example of a removals firm who took two years to comply with their automatic enrolment duties. This was despite receiving two Fixed Penalty Notices (FPNs) and an Escalating Penalty Notice (EPN). It was only when TPR applied for a CCJ that the employer became compliant and paid their fines.

Charles Counsell, Automatic Enrolment Executive Director has commented.

He said, “A CCJ goes onto an employer’s credit record for six years, affecting their ability to get business loans.

“Burying your head in the sand and ignoring your legal duties means your staff are missing out on pensions they are entitled to. And also your credit rating and reputation could be hit.”

Between October and December 2,919 £400 Fixed Penalty Notices were issued, bringing the total since 2012 to 9,831.

The report flags the hospitality sector as an area at higher risk of non-compliance. The sector, which includes hotels, pubs and bars, has received a higher percentage of fines. This typically includes a large proportion of employees on non-standard contracts, which explains the higher proportion of non-compliance.

Small employers can become non-compliant because they are more likely to leave things to the last minute. But in most cases the nudge of a compliance notice is enough to get them back on track.

Counsell added, “Our message to small and micro employers has always been to ensure they leave enough time. But also be clear about what they will need to do to comply. We are here to help – but we will take action if an employer is wilfully non-compliant.

“There’s plenty of information on our website on how to assess and enrol people who work varying hours, so there’s no excuse not to comply.”

Recent research by YouGov found that auto-enrolment (AE) is fair and good. Surveys showed around 60% of SMEs think auto-enrolment is fair and good and should be applied to all employers. And more than two thirds (70%) of those that have staged think AE is a good thing for their employees.

The survey was conducted among senior decision-makers at SMEs that were aware of their business’s staging date. It also found the majority (51%) of SMEs that had already staged supported workers currently outside AE being brought in. The same percentage also supported the self-employed being brought in.

Lee French from Corinthian Affinity comments:

French said: “It’s great that the majority of companies are satisfied with the principle of auto-enrolment and its effect on their employees. However, there are clearly concerns with how it impacts on the business itself. If you want advice on how to minimise the disruption and red-tape, why not contact us for an informal chat?”

There was also reasonable support for compulsion amongst SMEs, with 43% of those that have already staged saying they thought all eligible employees should be forced to pay into a workplace pension, with no opt outs.

And 46% of SMEs that had already staged agreed that businesses had a role to play in minimising opt outs amongst their employees.

15 January 2017

The Pensions Regulator (TPR) issued its first fines against master trusts who fail to fully demonstrate good governance.

The trustee of Nurture Master Trust was ordered to pay £2,000 for failing to prepare a chair’s statement for the scheme. The maximum fine was imposed because the scheme had a professional trustee in place and there were no mitigating factors.

Separately, the trustees of Save and Prosper Funds were fined £3,020 after failing to prepare a chair’s statement for three master trust schemes.

TPR has issued a regulatory intervention report about both cases. In all the schemes the relevant trustee has now produced chair’s statements.

Nicola Parish, Executive Director for Frontline Regulation at TPR has commented

Parish said, “Completion of the chair’s statement is a basic requirement of good governance and we expect trustees to comply.

“We will enforce the law and impose a penalty where trustees fail to prepare an annual governance statement signed by the chair of trustees. These requirements apply equally to trustees of master trusts.

“These latest fines result from our ongoing focus on ensuring that trustees comply with the requirements of good governance.

“Trustees should be aware that this type of breach will result in a fine. We hope our latest report is a reminder to trustees to ensure they complete the chair’s statement fully and on time.”

Trustees are required to confirm that they have completed the chair’s statement via the scheme return. TPR is supporting trustees in numerous ways. This includes new web guidance and news-by-email to help them understand how to complete the new scheme return. This will include confirmation of completion of a chair’s statement, to demonstrate they are meeting new governance standards.

Corinthian’s preferred pension scheme, Salvus Master Trust, continues to not only meet, but excel the basic standards. It has achieved the Master Trust Assurance Framework (MAF) accreditation – the Pensions Regulator’s standard. The Salvus Master trust has also received a five-star rating (the highest) from Defaqto, the independent financial products’ researcher.

13 December 2016

1. Lastminute.com

With over 1 million small businesses yet to reach their Auto-Enrolment (AE) staging date, it’s essential to plan early. Leaving it too late will create unnecessary time pressures, will increase the costs and could lead to a fine! Unfortunately, 1 in 5 businesses now miss their staging date completely. As a result, over 26,000 Compliance Notices have already been issued by the Pensions Regulator.

2. Auto-Enrolment has very little to do with Pensions!

AE is designed to remove barriers to joining pension schemes and taking away the need for employees to actively join. However, it is only partially about pensions. It is mainly about data, administration and process.

3. It is definitely more complex than you think!

AE is extremely detailed and complex for the inexperienced. But the regulations are clear in that it is the employer’s responsibility to manage and implement their duties. It’s estimated that it will take each employer around 250 hours to understand, digest and implement these new legal duties. This is going to be difficult, especially for employers that do not have an in-house pensions or HR specialist. There are circa 33 new mandatory pension duties. Research shows many employers will struggle with the most fundamental tasks, such as establishing the date AE applies to them.

4. Burying your head in the sand!

Doing nothing is not an option, Auto-Enrolment is here and it is here to stay. A recent Pensions Regulator survey established that 74% of small/micro employers will turn to their professional adviser for help. In fact, many of our existing partners have told us their clients are just expecting them to deal with AE. But they are also holding them responsible for any penalties they receive from the Pensions Regulator.

5. Choosing support based on price alone!

The larger employee benefit consultancies and many IFAs are not interested in the micro AE market. However, there are lots of advisers that profess knowledge, systems and processes to help, sometimes for little or no cost. There is no such thing as a “free” AE solution, especially if you want an all-inclusive solution.

6. NEST is NOT the answer!

The NEST scheme is only a pension provider, not an all-inclusive end to end Auto-Enrolment solution. This will ultimately mean that you undertake more work than you would otherwise need to. NEST was set up by the government to make sure that every employer would have access to a qualifying workplace pension scheme (QWPS) to comply with the Auto-Enrolment legislation and was supposed to be the last resort for small/micro employers who couldn’t find an alternative pension provider.

7. Taking on more than you can chew!

There is never a good time to implement an Auto-Enrolment solution of your own, it is unlikely to be part of your core business and you are no doubt already extremely busy. However, you are probably fully aware of the risks of not helping your clients. If they fail to comply with their responsibilities, they will be fined. We have found that those professional advisers and ‘affinity’ groups that are on the front foot and proactive when it comes to Auto-Enrolment and supporting their clients, have reaped the rewards for doing so.

How can Corinthian Affinity help?

Corinthian Affinity improve people’s lives by making the complicated simple. As we appreciate that pensions isn’t necessarily part of your core business, we’ll offer as much support as you need to solve all of yours and your clients’ Auto-Enrolment problems.

You will benefit from one simple all-inclusive end to end solution to Auto-Enrolment which will ensure you can take advantage of the opportunities in as simple and cost effective manner as possible. This includes:

• Face to face training at the outset
• A dedicated helpdesk for ongoing support
• Streamlined bulk scheme registration and set up in less than a minute
• Payroll data integration support
• One simple process for all your Auto-Enrolment administration
• Automated Direct Debit facility for payment of contributions
• Declaration of Compliance support
• 5 star Defaqto rated and Master Trust Assurance Framework accredited (AAF 02/07) Qualifying Workplace Pension Scheme

You will make more money, save time and have less stress, whilst knowing you have added value to your clients and enabled them to focus on running their business.

Jackie Wilding, Partner at Bryden Johnson Chartered Accountants & Business Advisers says:

“Being an Affinity partner has enabled me to give the right advice for our clients, not just ensure they have ticked a compliance box. I have complete confidence that I can recommend a broad range of options and help the client find the right solution to give them best value for their staff’s futures.”

“The online portal is fantastic, intuitive and easy-to-use which aligns to our payroll service and enables us to provide a seamless service to our clients and just takes away all the pain and stress of dealing with Auto-Enrolment. As a result, it improves our profit margin and keeps our clients’ confident in our ability to deliver the best, most cost-effective advice.”

To find out more visit http://www.corinthianaffinity.co.uk or speak with our Affinity Helpline on 0800 484 0021.

2 November 2016

The number of penalties and fines dealt out to companies who fail to meet their AE pension deadlines has soared.

15,073 compliance notices, ordering business owners to adhere to pension regulations were issued between July and September. That is almost 60% of the total since auto-enrolment began in 2012.

Fixed penalty fines of £400 were issued to 3,728 companies. Further escalating penalties of between £50 and £10,000 were handed down to 576 firms.

These are the most fines issued in any quarter. The Pensions Regulator says this is down to the larger number of companies reaching their auto-enrolment staging dates.

Lee French, Director of Corinthian Affinity Solutions Limited, commented: “One in five businesses are missing their staging date and risk being fined so it is really important that they take advice as soon as possible.”

“Auto-enrolment is only partially about pensions. It is mainly about administration, so it’s important to plan ahead and ensure the changes required are in place.”

The Pensions Regulator said excuses not being accepted as “reasonable” include illness, reminders not being received and making a mistake.

One example case was a ruling against the owner of an Essex-based recruitment consultancy who had fallen ill. A judge said it was her responsibility to delegate the pensions compliance work rather than miss her staging date by two years. This shows tPR is not listening to excuses so you really do need to consider it sooner rather than later.

How Corinthian can help

To date, the Corinthian Group of Companies has helped more than 500 companies meet their auto-enrolment duties. Over the next 12 months, hundreds of thousands of small businesses will reach their staging date to auto-enrol staff in a qualifying workplace pension scheme.

Contact our professional team today if this is something you need help with to avoid heavy fines.

Are you unprepared for auto-enrolment?

Almost two-thirds of accountancy firms say their clients are unprepared for auto-enrolment (AE). They also say the costs of meeting their new legal requirements at their staging dates have “significantly increased”.

61% practitioners questioned by Accountancy Age revealed their clients were “not very” or “not at all” prepared for AE.

Four in ten (39.4%) said their practice’s costs had “significantly increased”. Processing, staff and admin time, client preparation and providing advice were among the main reasons.

Over the next year, thousands of businesses will reach their staging date to AE staff in qualifying workplace pension schemes.

The survey also revealed that half the firms lack confidence in selecting a pensions provider for their clients. It also showed 72.3% of firms are worried about clients being fined by the Pensions Regulator.

How Corinthian can help

Lee French is a Director of Corinthian Affinity, part of the Corinthian Group. Corinthian enables accountants, payroll providers and other affinity groups to deliver an AE solution saving clients money, time and stress.

“We want to ensure small businesses don’t miss their staging date by making a complex process simple,” said Lee. “That is why we have created the Affinity solution especially for accountants, payroll providers, IFAs and other affinity groups. It will give them the tools they need to support their clients.

“One in five businesses are missing their staging date and risk being fined. This means it’s important for those of us who advise small and micro businesses to have simple, cost-effective solutions. This is the only way to deal with the tsunami of businesses facing staging dates until April 2018.”

To date, Corinthian Affinity has helped over 100 ‘affinity’ groups provide a simple AE solution for their smaller clients. It offers the Salvus Master Trust as its preferred pension provider. This trust has already achieved the Master Trust Assurance Framework (MAF) accreditation. This is the Pensions Regulator’s new standard. It has also received a five-star rating from Defaqto, the independent financial products’ researcher.

Master trusts are to be under legal scrutiny and targeted with new restrictions as laws on pension schemes are strengthened.

New legal powers to scrutinise these trusts had their first reading in the House of Lords this month.
Corinthian Group Managing Director Robert MacGregor said: “We welcome the Pensions Bill being passed in law”.

Corinthian’s preferred pension scheme, Salvus Master Trust, has already achieved the Master Trust Assurance Framework (MAF) accreditation, which is the Pensions Regulator’s new standard. And it has also received a five-star rating from Defaqto, the independent financial products’ researcher.

Five key criteria were included in The Pensions Bill:

• That “Fit and proper” people are involved in a master trust’s management
• The scheme must be financially sound
• It must have an “adequate continuity strategy”
• Appropriate systems and processes should exist for their governance
• And also for their administration

“It’s simply a consumer protection item,” said pensions minister Richard Harrington at the recent Pensions and Lifetime Savings Association’s Annual Conference in Liverpool. “We can’t have a system where some pension schemes are more regulated than others.”

The PLSA is also calling for a rigorous scrutiny process to ensure the criteria are being met. A new legal framework could greatly boost the reputation of master trusts. This reputation has been tarnished by how some have not adequately provided for their members. As the schemes have had less governance than other pension plans and low entry barriers, it meant anyone could set one up for a low capital cost.

This has meant the benefits of master trusts have sometimes been overlooked. These include offering employers the benefit of a governance function but with generally low operating costs as well as greater simplicity and expediency than a single employer scheme.

For more information please contact 020 3668 3999 or e-mail [email protected].

23 August 2016

Why do we need to dispell myths about NEST?

The last quarterly update form the Pensions Regulator (tPR) highlighted that employers are simply not taking auto-enrollment seriously enough and leaving things to the last minute. It’s also worth noting that a lot of the enforcement actions reported from the last quarter will be relating to staging dates in June, July and August last year, as their Declarations of Compliance won’t have been due until October, November and December, and tPR seems to be giving employers the chance to put things right themselves before slapping them with a fine.

Therefore, in this worrying trend of increasing non-compliance, 36% of all Fixed Penalty Notices issued in the last quarter and 75% of all Escalating Penalty Notices are probably not yet relating to micro employers.

Apparently one in two employers staging today are going directly to NEST, which is very worrying as there is a misapprehension that going to NEST will mean they’ve complied. Therefore, I thought it would be useful to dispel some of the myths about it.

Did you know?

• NEST was set up by the government to make sure that every employer would have access to a qualifying workplace pension scheme (QWPS) to comply with the auto-enrolment process.
• It was supposed to be the last resort for small/micro employers who couldn’t find an alternative pension provider
• The scheme is only a pension scheme
• It is administered by TATA Consultancy Services in India
• The pension scheme provides limited support via a telephone helpline to India
• The auto-enrolment legislation is only partially about pensions, it is mainly about data, administration and process
• The scheme does not have a simplified bulk registration process
• It does not manage the assessments, communications, opt-ins, opt-outs, declarations of compliance, etc, which ultimately means:
  • You have to do all of this yourself; and
  • You undertake more work than you would otherwise need to
• The NEST pension scheme may not be in many employees best interest because
  • It is not portable and does not allow transfers of pension funds in or out
  • It has a maximum contribution limit of £4,700
  • The scheme only has six investment choices
  • NEST does not support salary sacrifice
• NEST does not currently have any employer charges, however,
  • It borrowed £387m from the government
  • If not for the tax-payer, NEST would fail any due diligence on their sustainability
  • NEST requires £20bn in assets to meet their costs, but current assets are less than £1bn
  • The last reported accounts showed NEST now owing £460m to the Department of Work and Pensions
  • Estimates show that NEST is currently around 70 years away from sufficiency
• Faced with these financials, one must consider how NEST could accelerate their repayment structure. With no scope to increase member charges, there is a significant risk that it will have to take money from its existing and future customers.