Two thirds of the smallest employers unclear on automatic enrolment staging dates, says regulator

The latest employer awareness research (31-page / 2MB PDF), published every six months by the Pensions Regulator, showed that only 29% of those with 'staging dates' in 2016 could report exactly when this was. Similar numbers due to stage between January and April 2017 accurately knew their staging date, according to the research.

The Pensions Regulator's official advice is that employers should start preparing for automatic enrolment 12 months in advance of their staging date. It found that around 90% of those with staging dates between August and November 2015 had already begun their preparations.

Pensions expert Tom Barton of Pinsent Masons, the law firm behind Out-Law.com, said that although it was "no surprise" that the smallest employers had the lowest level of awareness of their requirements, they would be just as liable to the regulator for any breaches.

"It won't have escaped the regulator's attention that small and micro employers employ an awful lot of workers," he said. "These workers are just as entitled to scheme membership and employer contributions as anyone else. Size of employer is not a factor, the requirements apply to all - and so too the fines, penalties and even criminal sanctions. We may yet see some of the more severe powers being exercised by the regulator if there is widespread breach at the smallest end of the employer spectrum."

"Hopefully this will not need to happen. Certainly, the regulator is publicising auto-enrolment – as anyone who listens to commercial radio will testify – and has also prepared some pretty comprehensive guidance on the subject. There are also a range of solutions at the end of the market too - with perhaps more private sector interest in these employers than was first anticipated. So help is at hand for smaller employers, and it can come from a variety of sources," he said.

Auto-enrolment began for the largest employers on 1 October 2012, and 'staging dates' by which smaller companies will have to begin the process run until 2018. Under the programme, all employers whatever their size will have a legal duty to automatically enrol workers into a pension scheme which meets certain minimum requirements, and will be legally obliged to make contributions towards the pensions of those that do not have to opt out. They will also be required to 're-enrol' those who opt out once every three years.

Barton said that the staggered staging dates meant that the largest employers would already be preparing to re-enrol these members, long before the smallest staged for the first time.

"Re-enrolment is a good time to check that the scheme, the processes and any associated services remain fit for purpose," he said. "There has been so much change since the first auto-enrolment schemes came into being that employers may well benefit from revisiting their pension arrangements. There are new opportunities to manage cost and risk, and promote workplace pensions for the benefit of the workforce and the business."

Enforcement powers available to the Pensions Regulator to ensure employer compliance with their duties include the ability to carry out inspections; and to issue statutory notices, fixed penalties and escalating fines. These can reach up to £10,000 per day for the most serious breaches.

Separate research conducted by the Pensions Regulator found almost universal awareness of automatic enrolment amongst all types of intermediaries, with awareness amongst bookkeepers similarly high at 94%. Respondents were also increasingly likely to act on behalf of their clients, as opposed to providing more passive information or advice services. The vast majority of accountants, bookkeepers and payroll administrators said they were willing to provide automatic enrolment services to micro-employers, while 78% of IFAs said that they planned to do so.

Charles Counsell, the regulator's executive director of automatic enrolment, said that it was "positive" that "more advisers have stepped up to meet the needs of employers by developing new services, and by directing clients to the regulator's website".

"I urge all intermediaries to ensure they can fulfil this vital role as more employers seek assistance," he said.