Auto Enrolment: What happens if I don't comply or I'm late complying

Like all employers, you need to comply with your duties under automatic enrolment – it’s the law.     

The Pension Regulator (TPR) recognises that most employers will want to do the right thing for their staff, and will work with you if help is needed to get you compliant. However, if you ignore your duties you may face enforcement action.

 

Key points

 The responsibility for complying with the employer duties rests with you.

 If you don't comply, you may face enforcement action.

 Enforcement action usually starts with statutory notices and is followed by penalty notices.

 If you comply late, you will need to pay back any missed contributions to put staff in the position they would have been in if you had complied on time.

 Deliberately failing to enrol eligible staff and knowingly including false information in a declaration of compliance are criminal offences and may result in prosecution.

If you are late complying with these duties TPR’s approach is to educate and enable and enforce where necessary. They communicate with all employers to make you aware of your duties and to help you understand what you need to do to comply with the law. It’s important that as an employer you realise that responsibility for being compliant rests with you.

In cases where an employer hasn’t understood their duties or have been unable to comply, TPR will work with them to get them compliant. However, if you have chosen to ignore your duties, they may use enforcement powers to ensure compliance.

If you are late complying or think you might be, you should tell TPR about it straight away. It’s important that employers take reasonable steps to put all workers back in the position they would have been in if they had complied on time – the employer should not profit from their mistake.

For example, if your fail to enrol a worker from your staging date, you should:

 enrol them in a pension scheme, and treat the staging date as the automatic enrolment date,

 ensure members of staff are in the position they would have been in had you complied on time,

 give staff the option to pay their own backdated contributions –  staff can choose whether or not they wish to do this.

 

What are The Pensions Regulator’s enforcement options?

Informal action

Guidance and instruction can be issued by telephone, email, letter and in person. Warning letters may also be sent confirming a set time frame for compliance with the duties.

 

Statutory notice  

Statutory notices are sent in the post, and can direct you to comply with your duties and/or pay any contributions you have missed or are late in paying. If unpaid employer contributions are not paid within three months of the notice being issued, you can be required to pay any outstanding staff contributions too.

 

Penalty notices

Penalty notices are sent in the post, and can be used to address persistent and deliberate non‐compliance. A fixed penalty notice may be issued if you don't comply with statutory notices. This is fixed at £400 and payable within a specific period.   An escalating penalty notice can be issued for failure to comply with a statutory notice. This penalty has a prescribed rate of £50 to £10,000 per day depending on the number of staff you have.

A civil penalty can be issued for cases where an employer fails to pay contributions that are due. This is a financial penalty of up to £5,000 for individuals and up to £50,000 for organisations.

NB: The Pensions Regulator aims to fully recover all the penalties issued (using court action if necessary).

 

What to do if you receive a penalty notice

If you receive a penalty notice, you can pay it using TPR’s secure online payment service. You should have your penalty notice reference handy (shown on the front of the notice). Failure to pay the penalty can result in The Pensions Regulator bringing formal legal proceedings to recover the penalty.  

Useful links

Compliance and enforcement bulletins 

Online payment service

Popular questions