The Pensions Regulator has a difficult line to tread between enforcement and leniency for the many employers likely to fail to comply with their auto-enrolment duties by next year’s staging dates, a pensions expert has said.

Jelf Employee Benefits head of benefits strategy Steve Herbert says there is “limited” public understanding of the components of auto-enrolment compliance, and many employers set to stage next year will need to invoke the three-month postponement window to give them time to comply.

However, he said even this requires some compliance and communication that a lot of employers may overlook.

“Many small businesses are still unaware, unprepared, or in denial about AE, and with the deadline looming some owner/managers are going to face a serious wake up call,” Herbert. “Small business associations need to champion their members’ cause to ensure that the problems they face are better understood by The Pensions Regulator in the lead up to AE compliance.”

The first wave of medium-sized employers will reach their staging dates in April next year. More than 5,000 employers will be subject to their statutory auto-enrolment duties from April, followed by more than 20,000 employers – each with fewer than 250 workers – who will reach their staging date between May and July.

The regulator and the Department for Work and Pensions will “almost certainly” need to outline how they intend to treat initial non-compliance with auto-enrolment by summer, Herbert said, balancing the need to ensure compliance with the likelihood of many employers breaching regulations by accident.

A ‘capacity crunch’ in service and advice provision has been predicted by many as thousands of new employers enter auto-enrolment, and Herbert said this is likely to become visible next year.

Employers who have not already contracted with professionals may struggle to find support, thus needing to navigate the auto-enrolment process themselves.

“If I was running a small business or in charge of its HR at this very moment, I’d block out January and focus on ensuring I was on track for AE,” Herbert said. “Non-compliance is simply not an option as the reputational and financial implications of failing to comply could be significant. It will however be intriguing to see how the TPR position their enforcement of the employer duties in 2014.”

Share Story: