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.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here