The number of businesses fined by The Pensions Regulator (TPR) for auto-enrolment errors increased by 144 per cent in 2017/18, according to data from EMW.
There were a total of 35,810 businesses fined in 2017/18, up from 14,650 in 2016/17.
The value of auto-enrolment fines totalled £42m in 2017/18, more than triple the £12.6m of fines in 2016/17.
EMW suggested that the increase in the number of fines is partially due to the expansion of the auto-enrolment pension regime to cover smaller businesses, not just large- and medium-sized firms.
Furthermore, the complexity of auto-enrolment schemes means that smaller businesses without in-house HR departments are at greater risk of making errors when attempting to auto-enrol staff.
However, the rise in fines does not necessarily mean that employers are deliberately avoiding auto-enrolling staff, as businesses can be also fined for not providing TPR with regular data and salary updates.
This is particularly a problem for the smaller firms, as larger companies often use specialist payroll software or an accountant to calculate pension payments, whereas smaller businesses may not have the same resources.
EMW principal, Jon Taylor, commented: “The sharp rise in the number of fines by suggests that SME’s are having real problems keeping on top of complex auto-enrolment schemes.
“While larger businesses will have the necessary infrastructure and expertise to correctly auto-enrol workers, the same does not always apply to smaller businesses.”
Auto-enrolment errors can become increasingly costly for employers if they go unreported for an extended period of time.
The number of fines for auto-enrolment errors has been steadily increasing since it was introduced, from 382 in 2014/15, to 1,904 in 2015/16 before increasing further in 2016/17 and 2017/18.
Taylor concluded: “Considering the huge number of businesses now being caught by fines perhaps The Pensions Regulator needs to consider moderating the scale of the fees especially for SMEs.”