Home Business NewsBusiness Increased fines from Pensions Regulator highlights that companies must audit pension schemes for mistakes

Increased fines from Pensions Regulator highlights that companies must audit pension schemes for mistakes

4th Aug 17 8:26 am

Have you checked yours?

The Pension Regulator’s latest figures on auto-enrolment for the year up to 31 March revealed that it had significantly increased its inspections on businesses and it increased its use of powers to crack down on firms whose auto-enrolment schemes were found to be non-compliant.

The Pension Regulator used its powers 50,068 times in the year, compared to only 8,812 in the previous year. 153 employers were issued with a County Court Judgment for failing to pay fines in respect of auto-enrolment; there were 398 whistleblowing instances reported and more than half of these were to report incorrectly paid contributions.

Steve Butler, CEO, Punter Southall Aspire, a leading workplace savings and pensions company said, “The Pension Regulator has demonstrated it has teeth.With increased spot checks on companies, it has never been more critical for companies to audit their pension schemes regularly and eradicate any mistakes.

“Because the Government gave such short deadlines for auto-enrolment many auto enrolment schemes were set up in a rush, and there were no previous models of how auto-enrolment should work to follow.

“However, not only were some schemes set up in haste, they have been run with minimal oversight, without anyone really checking it was set up correctly or how it is performing. These fines could have been avoided with better auditing and regular governance meetings.”

“It’s not just auto-enrolment mistakes that need to be checked. Pension regulations are constantly changing so if companies ever believe their schemes are finally fully compliant and can be left alone, they risk being caught out. 

”Companies must also check the performance of their scheme. We once reviewed a pension scheme for a client who didn’t hold governance meetings and found their existing provider was charging them much more than the market norm. They were shocked because they’d spent a long time making sure they’d chosen well. But the provider hadn’t been ripping them off. In fact, it had been a very competitive rate when the scheme was put into place – five years earlier.”

“With regular governance meetings, this could never have happened, because there would have been a safety mechanism in place to ensure the scheme was reviewed, and the company was getting value for money.” 

“Any number of problems can bedevil a pension scheme, from a lack of compliance and performance issues to low employee engagement and high numbers of opt-outs. But what’s clear from these figures from the Regulator is that those who fail to audit their schemes are at risk of enforcement action. With thousands of micro businesses preparing for auto enrolment, it is essential they get the right advice and set up the schemes correctly from the outset.”

Punter Southall has just released a new eBook ‘The Ultimate Guide to Good Governance.’ To download the eBook click here.

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