Business fined £350,000 for pension failures

The Pensions Regulator (TPR) is warning employers not to put their head in the sand after one business ended up with a £350,000 fine from the watchdog for failing to comply with auto enrolment pension rules

Despite warnings from TPR, the unnamed employer, which is a London-based services company with 5,000 staff, allowed an escalating penalty notice to grow before correctly re-enrolling staff into the company pension scheme and paying the right contributions.

Following TPR’s intervention, the company was forced to re-enrol more than 40 staff and paid more than £100,000 of backdated pension contributions, as well as ensuring ongoing contributions are correctly calculated and paid.

The backdated payments, which are in addition to the fine, cover both the re-enrolment failure and incorrect contributions affecting more than 2,000 staff.

Darren Ryder, TPR director of automatic enrolment, said: ‘This size of fine is rare as the vast majority of employers now consider automatic enrolment to be an everyday part of running their business and helping workers to save. However, this case is a stark warning that failing to address problems early can lead to hefty fines which could be avoided.

‘We do not want to fine businesses, we want them to meet their legal duties and we are here to help them do this.’

The anonymous case study is included in TPR’s quarterly compliance and enforcement bulletin, which reports on TPR’s use of powers between April and June 2019. This also highlights details of the first time the watchdog used its powers to appoint a trustee primarily because of a lack of competence of the existing trustee board. 

After an investigation by TPR into a series of governance issues at Dunnes Stores, the case was referred to the determinations panel. The employer nominated trustees had failed to engage properly with TPR and persistently failed to address a number of governance concerns raised by TPR despite assurances that they would.

Despite more than a decade of being responsible for running the scheme, the employer nominated trustees had failed to ‘familiarise themselves with the requirements of UK pensions legislation.’ The trustees showed ‘that they do not have, or are not exercising, their knowledge and understanding for the proper administration of the scheme’ which led to a series of governance errors with little attempt to rectify them.

Pat Sweet

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