The Pensions Regulator’s chief executive Bill Galvin has explained how the Regulator plans to ensure employers are ready for auto-enrolment and that they comply with the new duties when they are required to.

Speaking at the CBI conference yesterday, Galvin said that TPR is taking a very proactive approach with the 600 largest employers, who collectively represent around a third of the working population and who will be staged in during the first six months following October 2012.

The Regulator works one-to-one with key representatives from these employers and all these companies have the opportunity to meet with TPR’s specialist large employer engagement team, either face-to-face or at least by phone, and they will have access to this team until their staging date. Galvin added that this support may extend well beyond the initial staging date in some complex cases.

He said: “This group of employers is so important to the success of automatic enrolment, not only because they represent such a large number of individuals, but also because the way that this group responds to automatic enrolment and to our processes will influence the way that all other employers will respond.”

However, with only 300 staff at the Regulator, it is impossible to account-manage all 1.3 million employers and therefore TPR is also looking at the industry. Their latest research shows that 75% of employers will seek advice from an intermediary or pension professional, while around 40% of medium employers will speak to their pension provider and around 15% will turn to a pension consultant or EBC.

The Regulator is therefore working with the industry to ensure they offer products with the right features, and to ensure that employers and those working on their behalf have a framework for selecting a scheme that is designed with the members’ best interest in mind.

Almost half of micro employers and a quarter of small employers are expected to turn to their accountant for advice, so TPR is also working with many non-pension specialists like accountants, book keepers and IFAs.

”The majority of the employers who will turn to this audience will not reach their staging date until 2015 and beyond and this of course means that their detailed preparations are unlikely to start now. At the moment for this group, and in fact for all employers, the most important message is ‘Know your staging date’,” Galvin said.

The Regulator will send two direct letters to every employer. One letter will be sent 12 months before their staging date and is a prompt for employers to make sure their plans are in a good place, and will be accompanied by a checklist. The other letter, three months before the staging date, is a final reminder. Employers will also have to register with TPR once they have completed the auto-enrolment process to show that they have complied.

Galvin also said that, in case of non-compliance, TPR will work with these employers to help them comply. “We are currently developing a set of risk factors that will help us recognise potential non-compliance early. We will apply these both proactively and reactively.

”Our proactive assessment of risk will include measuring and assessing emerging trends, working in partnership with other regulators who are also engaged in employer compliance, and creating a whistle-blowing channel that will provide a way for individuals to report suspected non-compliance directly to us.

”Where we see non-compliance, we will consider the circumstances of each case and, where it is proportionate and appropriate, we will intervene. This may involve us using our powers. But as now, we will exercise our powers only where other courses of action have not resulted in a positive solution.

”We want employers to know that we will be tough but fair where we see non-compliance.”

Despite all the details not being finalized yet, the compliance and enforcement process will mean that any employer who does not comply will be issued a compliance notice, which will direct them to comply with the relevant duties by a certain date. They also have the opportunity to contact the regulator and explain why they have not complied and to rectify the situation.

If this does not help, TPR will usually issue a penalty fine. “Where we issue a Statutory notice the employer will have a minimum of 28 days to comply – or to request a review. If they are disputing a penalty notice and are dissatisfied with the outcome of the review, they can also appeal to the First Tier Tribunal,” Galvin explained.

If following the issuance of a fixed penalty fine the employer still does not act to comply, TPR will consider further enforcement options, such as escalating penalties.

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