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Complaints to pension regulator rise as auto-enrolment expands

The number of whistleblowing reports to the UK pensions regulator has risen by a third in the past year, as smaller employers begin auto-enrolling employees.13 Oct 2015

The regulator received 1,985 whistleblowing reports in 2014-15, up 33% from the 1,497 the year before. But the number of employers enrolling workers in pension schemes has risen by much more, the regulator said.

There has been a rise of around 200% in the number of employers beginning to enrol staff in pensions under automatic enrolment rules introduced in 2012, the pensions regulator said in a statement.

Under the auto-enrolment programme all employers will have a legal duty to automatically enrol workers into a pension scheme that meets certain minimum requirements, and will be legally obliged to make contributions towards the pensions of those that do not opt out. They will also be required to 're-enrol' those who opt out once every three years.

The rules have been introduced gradually, beginning with larger companies in October 2012. The 'staging dates' when smaller companies have to begin the process run until 2018, but many are now reaching their dates, said pensions litigation expert Isabel Nurse-Marsh of Pinsent Masons, the law firm behind Out-Law.com.

"It's not surprising that some employers have failed to engage yet, as this is only now coming into play and is likely to be costly for them. It's interesting to see that employees are becoming aware of their rights, and I don’t expect the number of complaints to tail off any time soon. This is indicative of a trend that is set to continue and employers should prepare for a turbulent time," Nurse-Marsh said.

Complaints from whistleblowers have covered a wide range of subjects, the pensions regulator said, with some employees complaining about having been auto-enrolled against their will, rather than about their employers failing to do so. Any call that comes through the dedicated phone line is registered as 'whistleblowing' but these calls cover many subjects, a pensions regulator spokesperson said.

The pensions regulator issued 247 enforcement actions in 2014-15, compared with five in the previous year, it said.

The regulator has the power to fine firms which do not comply, with a possible fixed penalty fine of £400, and an escalating daily rate of between £50 a day for companies with between one and four employees and £10,000 a day for those with more than 500 employees.

These daily fines are set at a level that matches the "cash flow benefit" that an employer would gain by not complying, so that there is no incentive not to comply, the pensions regulator said.

The regulator said in July that almost two thirds of the UK's smallest employers still did not know the exact date that they would need to begin automatically enrolling their workers into a suitable pension scheme.