Surge in whistleblowing prompts pensions watchdog to take tough line on auto-enrolment

THE number of fines and other enforcement actions imposed on firms that failed to comply with pensions auto-enrolment rules quadrupled last year to almost 9,000 amid a surge in tip offs to regulators by whistleblowers, research has shown.

Law firm Clyde & Co said figures obtained from the Pensions Regulator show it used 8,800 enforcement actions against employers in the year to 31 March compared with 1,947 in the preceding year.

The regulator can impose fines of up to £10,000 a day on firms it finds have not established the pension schemes required for employees and made the right contributions into them.

London-based Clyde & Co found the number of reports made to the regulator by whistleblowers increased by around a third, 29 per cent, in the latest year, to 2,545 from 1,968.

The regulator says its strategy to detect non-compliance swiftly has involved putting in place effective systems to encourage whistle-blowers to report suspected breaches of the rules.

Clyde & Co, which acquired Scotland’s Simpson & Marwick in September last year, said the sharp rise in whistleblowing reports raises concerns many small and medium sized enterprises may face action for failing to comply with the auto-enrolment regulations introduced in 2012.

Large firms were the first required to implement the regulations but the net has widened to include many SMEs. All firms founded before April 2012 will be covered by April next year.

Mark Howard, head of pensions at Clyde & Co, said: "The final stages of the auto-enrolment process are likely to be the most challenging, as there are so many employers that will need to enrol their employees."

He added: “The SMEs yet to face their enrolment deadlines are not going to have the support of HR departments to help them deal with the administrative headache of enrolling their employees into a pension scheme."

Clyde & Co noted some larger employers had struggled with the auto-enrolment process. Swindon Town Football Club was fined over £20,000 in April 2016 after it failed to comply with the regulations.

The Pensions Regulator launched a probe into BHS after the stores group went into administration last month with a pension fund deficit of £571 million.

Other enforcement actions could include requiring employers to make good their and their employees' unpaid contributions.



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